(1) | Excludes approximately $6.8 million of a gain on sale(3)Excludes approximately $0.2 million of gains on sales of real estate recognized during the year ended December 31, 2020 related to gain amounts from sales of real estate occurring in the prior year.(4)Excludes approximately $0.3 million of losses on sales of real estate recognized during the year ended December 31, 2019 related to loss amounts from sales of real estate occurring in prior years. Interest and Other Income (Loss) Interest and other income (loss) decreased by approximately $13.0 million for the year ended December 31, 2020 compared to 2019, due primarily to a decrease of approximately $11.2 million in interest income which was primarily due to a decrease in interest rates. On January 1, 2020, we adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) and, as a result, we were required to record an allowance for current expected credit losses related to our outstanding (1) related party note receivable, (2) notes receivable and (3) off-balance sheet credit exposures (See Note 2 to the Consolidated Financial Statements). For the year ended December 31, 2020 the allowance for current expected credit losses was $1.8 million. Gains from Investments in Securities Gains from investments in securities for the year ended December 31, 2020 and 2019 related to investments that we have made to reduce our market risk relating to deferred compensation plans that we maintain for BXP’s officers and former non-employee directors. Under the deferred compensation plans, each officer or non-employee director who is eligible to participate is permitted to defer a portion of the officer’s current income or the non-employee director’s compensation on a pre-tax basis and receive a tax-deferred return on these deferrals based on the performance of specific investments selected by the officer or non-employee director. In order to reduce our
market risk relating to these plans, we typically acquire, in a separate account that is not restricted as to its use, similar or identical investments as those selected by each officer or non-employee director. This enables us to generally match our liabilities to BXP’s officers or former non-employee directors under our deferred compensation plans with equivalent assets and thereby limit our market risk. The performance of these investments is recorded as gains from investments in securities. During the year ended December 31, 2020 and 2019, we recognized gains of approximately $5.3 million and $6.4 million, respectively, on these investments. By comparison, our general and administrative expense increased by approximately $5.3 million and $6.4 million during the year ended December 31, 2020 and 2019, respectively, as a result of increases in our liability under our deferred compensation plans that was associated with the performance of the specific investments selected by officers and former non-employee directors of BXP participating in the plans. Impairment Loss Impairment loss may differ between BXP and BPLP as a result of previously applied acquisition accounting by BXP for the issuance of common stock in connection with non-sponsor OP Unit redemptions by BPLP. This accounting resulted in a step-up of the real estate assets at BXP that was allocated to certain properties. The difference between the real estate assets of BXP as compared to BPLP for certain properties having an allocation of the real estate step-up will result in a corresponding difference in depreciation expense. For additional information see the Explanatory Note that follows the cover page of this Annual Report on Form 10-K. At March 31, 2019, we evaluated the expected hold period of our One Tower Center property located in East Brunswick, New Jersey and, based on a shorter-than-expected hold period, we reduced the carrying value of the property to its estimated fair value at March 31, 2019 and recognized an impairment loss totaling approximately $24.0 million for BXP and approximately $22.3 million for BPLP. Our estimated fair value was based on a pending offer from a third party to acquire the property and the subsequent execution of a purchase and sale agreement on April 18, 2019 for a gross sale price of approximately $38.0 million. On June 3, 2019, we completed the sale of the property. One Tower Center is an approximately 410,000 net rentable square foot Class A office property. We did not have any impairments during the year ended December 31, 2020. Loss From Early Extinguishment of Debt On September 18, 2019, BPLP completed the redemption of $700.0 million in aggregate principal amount of its 5.625% senior notes due November 15, 2020. The redemption price was approximately $740.7 million. The redemption price included approximately $13.5 million of accrued and unpaid interest to, but not including, the redemption date. Excluding the accrued and unpaid interest, the redemption price was approximately 103.90% of the principal amount being redeemed. We recognized a loss from early extinguishment of debt totaling approximately $28.0 million, which amount included the payment of the redemption premium totaling approximately $27.3 million. On December 19, 2019, we used available cash to repay the bond financing collateralized by our New Dominion Technology Park, Building One property totaling approximately $26.5 million. The bond financing bore interest at a weighted-average fixed rate of approximately 7.69% per annum and was scheduled to mature on January 15, 2021. We recognized a loss from early extinguishment of debt totaling approximately $1.5 million, which amount included the payment of a prepayment penalty totaling approximately $1.4 million. New Dominion Technology Park, Building One is an approximately 235,000 net rentable square foot Class A office property located in Herndon, Virginia.
Interest Expense Interest expense increased by approximately $19.0 million for the year ended December 31, 2020 compared to 2019, as detailed below. | | | | | | | | | Component | | Change in interest expense for the year ended December 31, 2016 related2020 compared to a previously deferred gain amount from the 2014 sale of Patriots Park located December 31, 2019 | | | (in Reston, Virginia.thousands) |
Increases to interest expense due to: | | | (2)Issuance of $1.25 billion in aggregate principal of 3.250% senior notes due 2031 on May 5, 2020 | This property has 335 apartment units and approximately 50,000 net rentable square feet | $ | 26,618 | | Issuance of retail space. We have agreed$850 million in aggregate principal of 3.400% senior notes due 2029 on June 21, 2019 | | 13,714 | | Issuance of $700 million in aggregate principal of 2.900% senior notes due 2030 on September 3, 2019 | | 13,666 | | Increase in interest due to provide net operating income support of upfinance leases that are related to $6.0 million should the property’s net operating income faildevelopment properties | | 3,695 | | Decrease in capitalized interest related to achieve certain thresholds. As of December 31, 2016, we have a remaining obligation of approximately $2.8 million. This amount has been recorded as a reduction to the gain on sale. This property is subjectdevelopment projects | | 2,665 | | Increase in interest due to a groundfinance lease that expires on February 1, 2068.for an in-service property | | 535 | |
Other interest expense (excluding senior notes) | | 443 | | Total increases to interest expense | | 61,336 | | Decreases to interest expense due to: | | | (3)Redemption of $700 million in aggregate principal of 5.625% senior notes due 2020 on September 18, 2019 | This property was owned by a consolidated entity in which we had a 50% interest. The buyer assumed the mortgage loan which had a balance of $117.0 million. Approximately $101.1 million of the gain on sale of real estate was allocated to the outside partners and is included within Noncontrolling Interests in Property Partnerships in our Consolidated Statements of Operations. |
(28,172) | | (4)Decrease in interest rates for the 2017 Credit Facility | This is a 26-acre site with one occupied and three vacant existing office buildings. The remainder of the site is currently used for 1,699 surface parking spaces, but the land supports an additional 537,000 square feet of office/R&D development and two parking structures with a total of approximately 3,000 parking spaces. |
(9,364) | | (5) | Excludes approximately $0.4 million of gain on sale of real estate recognized during the three months ended December 31, 2015Increase in capitalized interest related to previously deferred gain amounts fromdevelopment projects that had finance leases | | (2,665) | | Repayment of a 2014 sale of real estate.bond financing collateralized by New Dominion Technology Building One | | (2,135) | | Total decreases to interest expense | | (42,336) | | Total change in interest expense | | $ | 19,000 | |
Interest expense directly related to the development of rental properties is capitalized and included in real estate assets on our Consolidated Balance Sheets and amortized over the useful lives of the real estate or lease term. As portions of properties are placed in-service, we cease capitalizing interest on that portion and interest is then expensed. Interest capitalized for the years ended December 31, 2020 and 2019 was approximately $53.9 million and $54.9 million, respectively. These costs are not included in the interest expense referenced above. On May 5, 2020, BPLP completed a public offering of $1.25 billion in aggregate principal amount of its 3.250% unsecured senior notes due 2031 (See Note 8 to the Consolidated Financial Statements). We used a portion of the net proceeds from this offering for the repayment of borrowings outstanding under the Revolving Facility. On February 14, 2021, BPLP completed the redemption of $850.0 million in aggregate principal amount of its 4.125% senior notes due May 15, 2021. The redemption price was approximately $858.7 million, which was equal to par plus approximately $8.7 million of accrued and unpaid interest to, but not including, the redemption date. At December 31, 2020, our variable rate debt consisted of BPLP’s $2.0 billion unsecured revolving credit facility (the “2017 Credit Facility”), which includes the $500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) and the $1.5 billion revolving line of credit (the “Revolving Facility”). The Delayed Draw Facility had $500.0 million outstanding as of December 31, 2020. The Revolving Facility did not have an outstanding balance as of December 31, 2020. For a summary of our consolidated debt as of December 31, 2020 and December 31, 2019 refer to the heading “Liquidity and Capital Resources—Capitalization—Debt Financing” within “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Noncontrolling Interests in Property Partnerships Noncontrolling interests in property partnerships decreased by approximately $151.9$22.9 million for the year ended December 31, 20162020 compared to 20152019, as detailed below.
| | | | | | | | | | | | | | Property | | Noncontrolling Interests in Property Partnerships for the year ended December 31, | 2016 | | 2015 | | Change | | | (in thousands) | 505 9th Street (1) | | $ | — |
| | $ | 103,507 |
| | $ | (103,507 | ) | Fountain Square (2) | | — |
| | 5,121 |
| | (5,121 | ) | Salesforce Tower | | (34 | ) | | — |
| | (34 | ) | 767 Fifth Avenue (the General Motors Building) (3) | | (26,777 | ) | | (20,784 | ) | | (5,993 | ) | Times Square Tower | | 26,777 |
| | 26,858 |
| | (81 | ) | 601 Lexington Avenue (4) | | (12,462 | ) | | 21,763 |
| | (34,225 | ) | 100 Federal Street | | 1,119 |
| | 3,986 |
| | (2,867 | ) | Atlantic Wharf Office Building | | 9,309 |
| | 9,404 |
| | (95 | ) | | | $ | (2,068 | ) | | $ | 149,855 |
| | $ | (151,923 | ) |
| | | | | | | | | | | | | | | | | | | | | Property | | Noncontrolling Interests in Property Partnerships for the year ended December 31, | 2020 | | 2019 | | Change | | | (in thousands) | Salesforce Tower (1) | | $ | — | | | $ | 116 | | | $ | (116) | | 767 Fifth Avenue (the General Motors Building) (2) | | 4,954 | | | 2,638 | | | 2,316 | | Times Square Tower (3) | | 3,535 | | | 27,146 | | | (23,611) | | 601 Lexington Avenue (4) | | 16,575 | | | 19,143 | | | (2,568) | | 100 Federal Street (5) | | 14,313 | | | 12,614 | | | 1,699 | | Atlantic Wharf Office Building (6) | | 8,883 | | | 9,463 | | | (580) | | | | $ | 48,260 | | | $ | 71,120 | | | $ | (22,860) | |
_______________ | | (1) | On September 18, 2015, we sold this property and approximately $101.1 million of the gain was allocated to the outside partners (See Note 11 to the Consolidated Financial Statements). |
| | (2) | On September 15, 2015, we acquired our partners’ nominal 50% interest (See Note 11 to the Consolidated Financial Statements). |
(1)On April 1, 2019, we acquired our partner’s 5% interest and subsequently own 100%.
| | (3) | The net loss allocation is primarily due to the partners’ share of the interest expense for the outside members’ notes payable which was $34.3 million and $30.8 million for the year ended December 31, 2016 and 2015, respectively.
|
| | (4) | On August 19, 2016, the consolidated entity in which we have a 55% interest and that owns this property commenced the redevelopment of the six-story, low-rise office and retail building component of the complex. The redeveloped portion of the low-rise building will contain approximately 195,000 net rentable square feet of Class A office space and approximately 25,000 net rentable square feet of retail space. We will capitalize incremental costs during the redevelopment. BXP and BPLP recognized approximately $50.8 million and $47.6 million, respectively, of depreciation expense associated with the acceleration of depreciation on the assets being removed from service and demolished as part of the redevelopment of the property. Approximately $21.4 million of those amounts was allocated to the outside partners. |
(2)The increase during the year ended December 31, 2020 was related to above-/below-market lease assets that were fully amortized in 2020.
(3)During the year ended December 31, 2020, we wrote off approximately $26.8 million of accrued rent and accounts receivable balances for tenants that either terminated their leases or for which we determined their accrued rent and/or accounts receivable balances, primarily retail tenants, were no longer probable of collection. Approximately $14.7 million represents our share of the write-offs. As a result of these terminations, lease revenue decreased for the year ended December 31, 2020. (4)During the year ended December 31, 2020, we wrote off approximately $2.9 million of accrued rent and accounts receivable balances for tenants that either terminated their leases or for which we determined their accrued rent and/or accounts receivable balances, primarily tenants in the retail sector, were no longer probable of collection. Approximately $1.6 million represents our share of the write-offs. As a result of these terminations, lease revenue decreased for the year ended December 31, 2020. (5)The increase was primarily due to an increase in lease revenue from our tenants. (6)During the year ended December 31, 2020, we wrote off approximately $0.5 million of accrued rent and accounts receivable balances for tenants whose balances we determined were no longer probable of collection. Approximately $0.3 million represents our share of the write-offs. Noncontrolling Interest—Common Units of the Operating Partnership For BXP, noncontrolling interest—common units of the Operating Partnership decreasedincreased by approximately $7.7$38.4 million for the year ended December 31, 20162020 compared to 20152019 due primarily to a decreasean increase in allocable income, which was the result of recognizing a greater gain on sales of real estate amount during 2015,2020 partially offset by an increasea decrease in the noncontrolling interest’s ownership percentage. Due to our ownership structure, there is no corresponding line item on BPLP’s financial statements.
Liquidity and Capital Resources General Our principal liquidity needs for the next twelve months and beyond are to fund:to: •fund normal recurring expenses; •meet debt service and principal repayment obligations, including balloon payments on maturing debt; •fund development/redevelopment costs; •fund capital expenditures, including major renovations, tenant improvements and leasing costs; development costs;
dividend requirements on BXP’s Series B Preferred Stock;
•fund planned and possible acquisitions of properties, either directly or indirectly through the acquisition of equity interests therein; •fund dividend requirements on BXP’s Series B Preferred Stock; and •make the minimum distribution required to enable BXP to maintain its REIT qualification under the Internal Revenue Code of 1986, as amended.
We expect to satisfy these needs using one or more of the following: •cash flow from operations; •distribution of cash flows from joint ventures; •cash and cash equivalent balances; •BPLP’s 2017 Credit Facility; •short-term bridge facilities; •construction loans; •long-term secured and unsecured indebtedness (including unsecured exchangeable indebtedness); •sales of real estate; and •issuances of BXP equity securities and/or additional preferred or common units of partnership interest in BPLP; BPLP’s 2017 Credit Facility and other short-term bridge facilities;
construction loans;
long-term secured and unsecured indebtedness (including unsecured exchangeable indebtedness); and
sales of real estate.BPLP.
We draw on multiple financing sources to fund our long-term capital needs. Our current development properties are expected to be primarily funded with our available cash balances, construction loans and BPLP’s 2017 CreditRevolving Facility. We use BPLP’s 2017 CreditRevolving Facility primarily as a bridge facility to fund acquisition opportunities, refinance outstanding indebtedness and meet short-term development and working capital needs. Although we may seek to fund our development projects with construction loans, which may require guarantees by BPLP, the financing for each particular project ultimately depends on several factors, including, among others, the project’s size and duration, the extent of pre-leasing and our available cash and access to cost effective capital at the given time.
The following table presents information on properties under construction and redevelopment as of December 31, 20172020 (dollars in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | Construction Properties | | Estimated Stabilization Date | | Location | | # of Buildings | | Square Feet | | Investment to Date (1) | | Estimated Total Investment (1) | | Estimated Future Equity Requirement (1) | | Percentage Leased (2) | | Office | | | | | | | | | | | | | | | | | | Salesforce Tower (95% ownership) (3) | | Third Quarter, 2019 | | San Francisco, CA | | 1 |
| | 1,400,000 |
| | $ | 941,872 |
| | $ | 1,073,500 |
| | $ | 140,632 |
| | 97 | % | (4) | The Hub on Causeway (50% ownership) | | Fourth Quarter, 2019 | | Boston, MA | | 1 |
| | 385,000 |
| | 58,699 |
| | 141,870 |
| | — |
| | 80 | % | (5) | 145 Broadway | | Fourth Quarter, 2019 | | Cambridge, MA | | 1 |
| | 485,000 |
| | 90,960 |
| | 375,000 |
| | 284,039 |
| | 98 | % | | Dock 72 (50% ownership) | | First Quarter, 2020 | | Brooklyn, NY | | 1 |
| | 670,000 |
| | 98,594 |
| | 204,900 |
| | — |
| | 33 | % | (6) | 6595 Springfield Center Drive (TSA Headquarters) | | Fourth Quarter, 2020 | | Springfield, VA | | 1 |
| | 634,000 |
| | 43,240 |
| | 313,700 |
| | 270,460 |
| | 98 | % | | 20 CityPoint | | First Quarter, 2021 | | Waltham, MA | | 1 |
| | 211,000 |
| | 15,073 |
| | 97,000 |
| | 81,927 |
| | 52 | % | | 7750 Wisconsin Avenue (Marriott International Headquarters) (50% ownership) | | Third Quarter, 2022 | | Bethesda, MD | | 1 |
| | 740,000 |
| | 21,416 |
| | 211,100 |
| | 189,684 |
| | 100 | % | (7) | Total Office Properties under Construction | | | | 7 |
| | 4,525,000 |
| | 1,269,854 |
| | 2,417,070 |
| | 966,742 |
| | 85 | % | | Residential | | | | | | | | | | | | | | | | | | Proto Kendall Square (280 units) | | Second Quarter, 2019 | | Cambridge, MA | | 1 |
| | 149,600 |
| | 83,670 |
| | 140,170 |
| | 56,500 |
| | N/A |
| | Proto Kendall Square - Retail | | | | | | — |
| | 14,400 |
| | — |
| | — |
| | — |
| | 26 | % | | The Hub on Causeway - Residential (440 units) (50% ownership) | | Fourth Quarter, 2021 | | Boston, MA | | 1 |
| | 320,000 |
| | 32,588 |
| | 153,500 |
| | 120,912 |
| | N/A |
| | Signature at Reston (508 units) | | Second Quarter, 2020 | | Reston, VA | | 1 |
| | 490,000 |
| | 194,242 |
| | 234,854 |
| | 40,612 |
| | 8 | % | (8) | Signature at Reston - Retail | | | | | | — |
| | 24,600 |
| | — |
| | — |
| | — |
| | 81 | % | | MacArthur Station Residences (402 units) | | Fourth Quarter, 2021 | | Oakland, CA | | 1 |
| | 324,000 |
| | 8,687 |
| | 263,600 |
| | 254,913 |
| | N/A |
| (9) | Total Residential Properties under Construction | | | | 4 |
| | 1,322,600 |
| | 319,187 |
| | 792,124 |
| | 472,937 |
| | 61 | % | | Redevelopment Properties | | | | | | | | | | | | | | | | 191 Spring Street | | Fourth Quarter, 2018 | | Lexington, MA | | 1 |
| | 171,000 |
| | 42,813 |
| | 53,920 |
| | 11,107 |
| | 88 | % | (10) | One Five Nine East 53rd Street (55% ownership) | | Fourth Quarter, 2019 | | New York, NY | | — |
| | 220,000 |
| | 65,232 |
| | 106,000 |
| | 40,768 |
| | — | % | | Total Redevelopment Properties under Construction | | 1 |
| | 391,000 |
| | 108,045 |
| | 159,920 |
| | 51,875 |
| | 38 | % | | Total Properties under Construction and Redevelopment | | 12 |
| | 6,238,600 |
| | $ | 1,697,086 |
| | $ | 3,369,114 |
| | $ | 1,491,554 |
| | 81 | % | (11) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financings | | | | | | Construction Properties | | Estimated Stabilization Date | | Location | | # of Buildings | | Estimated Square Feet | | Investment to Date (1)(2)(3) | | Estimated Total Investment (1)(2) | | Total Available (1) | | Outstanding at 12/31/2020 (1) | | Estimated Future Equity Requirement (1)(2)(4) | | Percentage Leased (5) | | Office | | | | | | | | | | | | | | | | | | | | | | 325 Main Street | | Third Quarter, 2022 | | Cambridge, MA | | 1 | | | 420,000 | | | $ | 181,917 | | | $ | 418,400 | | | $ | — | | | $ | — | | | $ | 236,483 | | | 90 | % | | 100 Causeway Street (50% ownership) | | Third Quarter, 2022 | | Boston, MA | | 1 | | | 632,000 | | | 189,528 | | | 267,300 | | | 200,000 | | | 108,287 | | | — | | | 94 | % | | 7750 Wisconsin Avenue (Marriott International Headquarters) (50% ownership) | | Third Quarter, 2022 | | Bethesda, MD | | 1 | | | 734,000 | | | 148,452 | | | 198,900 | | | 127,500 | | | 81,932 | | | 4,880 | | | 100 | % | | Reston Next (formerly Reston Gateway) | | Fourth Quarter, 2023 | | Reston, VA | | 2 | | | 1,062,000 | | | 372,788 | | | 715,300 | | | — | | | — | | | 342,512 | | | 85 | % | | 2100 Pennsylvania Avenue | | Third Quarter, 2024 | | Washington, DC | | 1 | | | 480,000 | | | 134,071 | | | 356,100 | | | — | | | — | | | 222,029 | | | 56 | % | | Total Office Properties under Construction | | | | | | 6 | | | 3,328,000 | | | 1,026,756 | | | 1,956,000 | | | 327,500 | | | 190,219 | | | 805,904 | | | 86 | % | | Redevelopment Properties | | | | | | | | | | | | | | | | | | | | One Five Nine East 53rd Street (55% ownership) | | First Quarter, 2021 | | New York, NY | | — | | | 220,000 | | | 137,964 | | | 150,000 | | | — | | | — | | | 12,036 | | | 96 | % | (6) | 200 West Street | | Fourth Quarter, 2021 | | Waltham, MA | | — | | | 138,000 | | | 17,028 | | | 47,800 | | | — | | | — | | | 30,772 | | | 100 | % | (7) | Total Redevelopment Properties under Construction | | — | | | 358,000 | | | 154,992 | | | 197,800 | | | — | | | — | | | 42,808 | | | 98 | % | | Total Properties under Construction and Redevelopment | | 6 | | | 3,686,000 | | | $ | 1,181,748 | | | $ | 2,153,800 | | | $ | 327,500 | | | $ | 190,219 | | | $ | 848,712 | | | 87 | % | |
___________ | | (1) | Represents our share. Includes net revenue during lease up period, acquisition expenses and approximately $61.5 million of construction cost and leasing commission accruals. |
| | (2) | Represents percentage leased as of February 22, 2018, including leases with future commencement dates. |
| | (3) | See Note 11 to the Consolidated Financial Statements. |
(1)Represents our share.
| | (4) | Under the joint venture agreement, if the project is funded with 100% equity, we have agreed to fund 50% of our partner’s equity requirement, structured as preferred equity. We expect to fund approximately $25.4 million at a rate of LIBOR plus 3.0% per annum and receive priority distributions from all distributions to our partner until the principal and interest are repaid. As of December 31, 2017, we had contributed an aggregate of approximately $16.4 million of preferred equity to the venture. This property was 7% placed in-service.
|
| | (5) | This development has a $102.3 million (our share) construction facility. As of December 31, 2017, approximately $0.4 million have been drawn under this facility. |
| | (6) | This development has a $125 million (our share) construction facility. As of December 31, 2017, approximately $18.5 million have been drawn under this facility. |
| | (7) | Rentable square feet is an estimate based on current building design. |
| | (8) | Investment amounts include approximately $17 million for overbuilding parking structure to support future development requirements and excludes $10 million of the purchase price for the site that is allocated to rights for future development in Reston Town Center. See Note 20 to the Consolidated Financial Statements. |
| | (9) | This development is subject to a 99-year ground lease (including extension options) with an option to purchase in the future. |
| | (10) | This property was 46% placed in-service. |
| | (11) | Percentage leased excludes residential units. |
Contractual rental(2)Investment to Date, Estimated Total Investment and Estimated Future Equity Requirement all include our share of acquisition expenses, as applicable, and reflect our share of the estimated net revenue/expenses that we expect to incur prior to stabilization of the project, including any amounts actually received or paid through December 31, 2020.
(3)Includes approximately $81.6 million of unpaid but accrued construction costs and leasing commissions. (4)Excludes approximately $81.6 million of unpaid but accrued construction costs and leasing commissions. (5)Represents percentage leased as of February 22, 2021, including leases with future commencement dates. (6)Represents the low-rise portion of 601 Lexington Avenue. (7)Represents a portion of the property under redevelopment for conversion to life sciences space.
Lease revenue (which includes recoveries from tenants,tenants), other income from operations, available cash balances, mortgage financings, unsecured indebtedness and draws on BPLP’s 2017 CreditRevolving Facility are the principal sources of capital that we use to fund operating expenses, debt service, maintenance and repositioning capital expenditures, tenant improvements and the minimum distribution required to enable BXP to maintain its REIT qualification. We seek to maximize income from our existing properties by maintaining quality standards for our properties that promote high occupancy rates and permit increases in rental rates while reducing tenant turnover and controlling operating expenses. Our sources of revenue also include third-party fees generated by our property management, leasing and development and construction businesses, as well as the sale of assets from time to time. We believe our revenue, together with our cash balances and proceeds from financing activities,these sources of capital will continue to provide the funds necessary for our short-term liquidity needs, including our properties under development and redevelopment. Material adverse changes in one or more sources of capital, including from the impacts of COVID-19, may adversely affect our net cash flows. In turn,During the fourth quarter of 2020, our rent collections remained strong as we collected 99.7% of rents from our office tenants and 99.1% of rents from all tenants, including retail tenants. However, COVID-19 resulted in the write-off of accrued rent balances for all remaining co-working tenants. Decreases in parking and other revenue and the continued disruption in operations for our hotel reduced our revenue for the fourth quarter of 2020. Cash rent abatements and deferrals primarily related to COVID-19 were approximately $19.2 million in the fourth quarter. This amount represents our consolidated cash rent abatements and deferrals plus our share of the cash rent abatements and deferrals from the unconsolidated joint ventures (calculated based on our ownership percentage) minus our partners’ share of cash rent abatements and deferrals from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests). To date, these changes couldimpacts have not adversely affectaffected our ability to fund operating expenses, dividends and distributions, debt service payments, maintenance and repositioning capital expenditures and tenant improvements. In addition, aAny future material adverse change in the cash provided by our operations may affect our ability to comply with the financial covenants under BPLP’s 2017 Credit Facility andor its unsecured senior notes. Our primary uses of capital over the next twelve months will be the completion of our current and committed development and redevelopment projects. Following the redemption of the $850 million aggregate principal amount of BPLP’s 4.125% senior unsecured notes on February 14, 2021, we have no further 2021 debt maturities, other than three loans borrowed by our unconsolidated joint ventures of which our share is approximately $102 million. As of December 31, 2017,2020, our share of the remaining development and redevelopment costs that we expect to fund through 2022 is2024 was approximately $1.5 billion.$849 million. In addition, we anticipate development/redevelopment starts in 2021 of over $700 million, the majority of which are new life sciences developments and conversions. With approximately $301To satisfy these capital needs, as of February 22, 2021, we had approximately $517 million of cash and cash equivalents, of which approximately $155 million is attributable to our consolidated joint venture partners.
Although the full impact of COVID-19 on our liquidity and approximately $1.8 billion available undercapital resources, as well as the 2017 Credit Facility, in each case, asduration of February 22, 2018,such impact, will depend on a wide range of factors, all of which are highly uncertain and cannot be predicted with confidence at this time, we have sufficient capital to complete these projects. We believe that our strong liquidity, including our availabilitythe approximately $1.5 billion available under BPLP’s 2017 Creditthe Revolving Facility and proceeds from debt financings and asset sales provideavailable cash, as of February 22, 2021, is sufficient liquidity to fund our remaining capital requirements on existing development and redevelopment projects, repay our maturing indebtedness when due, satisfy our REIT distribution requirements and pursue additionalstill allow us to act opportunistically on attractive investment opportunities. In addition, on June 2, 2017 we renewed BXP’s $600 million ATM stock offering program for a period of three years. We have not sold any shares under this ATM stockBXP’s $600.0 million “at the market” equity offering program. During 2020 we continued to access various sources of capital, including the fourth quarter, we reduced our overall borrowing cost and extended our debt maturities by refinancing $850sale of more than $920 million of 3.700%assets generating approximately $538 million of proceeds, the issuance by BPLP in May 2020 of $1.25 billion in aggregate principal amount of its 3.25% senior unsecured notes that were scheduleddue 2031 and the completion of $731.6 million of secured debt transactions to maturerefinance maturing debt, of which our share of the aggregate principal is $268.3 million. The refinancing transactions included the following: •A $250.0 million mortgage loan collateralized by Dock 72, a 669,000 square-foot Class A office property in Brooklyn, New York in which we have a 50% interest. The new loan matures on December 18, 2023.
•A $125.0 million mortgage loan collateralized by Market Square North, a 418,000 square foot Class A office property in Washington, DC in which we have a 50% interest. The new loan matures on November 15, 2018 with the proceeds from the issuance of $85010, 2025. •A $325.0 million of 3.200% senior notes maturing January 2025.mortgage loan collateralized by Metropolitan Square, a 654,000 square foot Class A office property in Washington, DC, in which we have a 20% interest. The new loan matures on July 7, 2022. Given the relatively low interest rates currently available to us in the debt markets, weWe may seek to enhance our liquidity to provide sufficient capacity to meet our debt obligations and to fund our remaining capital requirements on existing development projects, our foreseeable potential development activity, pursue additional attractive investment opportunities and pursue attractive additional investment opportunities.refinance or repay indebtedness. Depending on interest rates and overall conditions in the debt and equity markets, we may decide to access the debteither or both of these markets in advance of the need for the funds. Doing so may result in us carrying additional cash and cash equivalents pending BPLP’sour use of the proceeds, which would increase our net interest expense and it would be dilutive to our earnings by increasing our net interest expense.earnings.
REIT Tax Distribution Considerations Dividend BXP as a REIT is subject to a number of organizational and operational requirements, including a requirement that BXP currently distribute at least 90% of its annual taxable income (excluding capital gains and with certain other adjustments). Our policy is for BXP to distribute at least 100% of its taxable income, including capital gains, to avoid paying federal tax. On December 18, 2017,17, 2019, the Board of Directors of BXP increased our regular quarterly dividend to $0.80from $0.95 per common share.share to $0.98 per common share, or 3%, beginning with the fourth quarter of 2019. Common and LTIP unitholders of limited partnership interest in BPLP, as of the close of business on December 29, 2017, received the same total distribution per unit, on January 30, 2018.unit. BXP’s Board of Directors will continue to evaluate BXP’s dividend rate in light of our actual and projected taxable income (including gains on sales), liquidity requirements and other circumstances, including the impact of COVID-19, and there can be no assurance that the future dividends declared by itsBXP’s Board of Directors will not differ materially.materially from the current quarterly dividend amount. Sales To the extent that we sell assets at a gain and cannot efficiently use the proceeds in a tax deferred manner for either our development activities or attractive acquisitions, BXP would, at the appropriate time, decide whether it is better to declare a special dividend, adopt a stock repurchase program, reduce our indebtedness or retain the cash for future investment opportunities. Such a decision will depend on many factors including, among others, the timing, availability and terms of development and acquisition opportunities, our then-current and anticipated leverage, the cost and availability of capital from other sources, the price of BXP’s common stock and REIT distribution requirements. At a minimum, we expect that BXP would distribute at least that amount of proceeds necessary for BXP to avoid paying corporate level tax on the applicable gains realized from any asset sales. From time to time in selected cases, whether due to a change in use, structuring issues to comply with applicable REIT regulations or other reasons, we may sell an asset that is held by a taxable REIT subsidiary (“TRS”). Such a sale by a TRS would be subject to federal and local taxes. Cash Flow Summary The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below. Cash and cash equivalents wereand cash held in escrows aggregated approximately $434.8 million$1.7 billion and $356.9 million$0.7 billion at December 31, 20172020 and 2016,2019, respectively, representing an increase of approximately $77.9 million.$1.0 billion. The following table sets forth changes in cash flows: | | | | | | | | | | | | | | | | | | | Year ended December 31, | 2020 | | 2019 | | Increase (Decrease) | (in thousands) | Net cash provided by operating activities | $ | 1,156,840 | | | $ | 1,181,165 | | | $ | (24,325) | | Net cash used in investing activities | (613,719) | | | (1,015,091) | | | 401,372 | | Net cash provided by (used in) financing activities | 484,322 | | | (113,379) | | | 597,701 | |
| | | | | | | | | | | | | | Year ended December 31, | 2017 | | 2016 | | Increase (Decrease) | (in thousands) | Net cash provided by operating activities | $ | 907,445 |
| | $ | 1,036,874 |
| | $ | (129,429 | ) | Net cash used in investing activities | (897,814 | ) | | (1,329,057 | ) | | 431,243 |
| Net cash provided by (used in) financing activities | 68,222 |
| | (74,621 | ) | | 142,843 |
|
Our principal source of cash flow is related to the operation of our properties. The averageweighted-average term of our in-place tenant leases, excluding residential units, was approximately 7.4 years, as of December 31, 2020, including leases signed by our unconsolidated joint ventures, is approximately 7.3 years with occupancy rates historically in the range of 90% to 94%. OurGenerally, our properties generate a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service and fund regular quarterly dividend and distribution payment requirements. In addition, over the past several years, we have raised capital through the sale of some of our properties and through secured and unsecured borrowingsborrowings. The full extent of the impact of COVID-19 on our business, operations and equity offerings of BXP.financial results will depend on numerous evolving factors that we may not be able to accurately predict. In addition, we cannot predict the impact that COVID-19 will have on our tenants, employees, contractors, lenders, suppliers, vendors and joint venture partners; any material adverse effect on these parties could also have a material adverse effect on us. See Item 1A: “Risk Factors” for additional details. Cash is used in investing activities to fund acquisitions, development, net investments in unconsolidated joint ventures and maintenance and repositioning capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing and property management skills and invest in existing buildings to enhance or maintain their market position. Cash used in investing activities for the year ended December 31, 20172020 consisted primarily of acquisitions of real estate, development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sales of real estate and capital distributions to/from unconsolidated joint ventures. Cash used in investing activities for the year ended December 31, 20162019 consisted primarily of the acquisition of real estate, development projects, building and tenant improvements and capital contributions to unconsolidated joint ventures, partially offset by the proceeds from the sale of real estate and capital distributions from unconsolidated joint ventures, as detailed below:
| | | | | | | | | | Year ended December 31, | | 2017 | | 2016 | | (in thousands) | Acquisition of real estate (1) | $ | (15,953 | ) | | $ | (78,000 | ) | Construction in progress (2) | (608,404 | ) | | (500,350 | ) | Building and other capital improvements | (222,482 | ) | | (150,640 | ) | Tenant improvements | (205,331 | ) | | (230,298 | ) | Proceeds from sales of real estate (3) | 29,810 |
| | 122,750 |
| Proceeds from sales of real estate placed in escrow (3) | (29,810 | ) | | (122,647 | ) | Proceeds from sales of real estate released from escrow (3) | 29,810 |
| | 122,647 |
| Cash released from escrow for land sale contracts | — |
| | 1,596 |
| Cash released from escrow for investing activities | 9,230 |
| | 6,694 |
| Cash placed in escrow for investment in unconsolidated joint venture (4) | (25,000 | ) | | — |
| Capital contributions to unconsolidated joint ventures (5) | (109,015 | ) | | (575,795 | ) | Capital distributions from unconsolidated joint ventures (6) | 251,000 |
| | 20,440 |
| Proceeds from sale of investment in unconsolidated joint venture (7) | — |
| | 55,707 |
| Investments in securities, net | (1,669 | ) | | (1,161 | ) | Net cash used in investing activities | $ | (897,814 | ) | | $ | (1,329,057 | ) |
| | | | | | | | | | | | | Year ended December 31, | | 2020 | | 2019 | | (in thousands) | Acquisitions of real estate (1) | $ | (137,976) | | | $ | (149,031) | | Construction in progress (2) | (482,507) | | | (546,060) | | Building and other capital improvements | (160,126) | | | (180,556) | | Tenant improvements | (234,423) | | | (251,831) | | Right of use assets - finance leases | — | | | (5,152) | | Proceeds from sales of real estate (3) | 519,303 | | | 90,824 | | Capital contributions to unconsolidated joint ventures (4) | (172,436) | | | (87,392) | | Capital distributions from unconsolidated joint ventures (5) | 55,298 | | | 136,807 | | Cash and cash equivalents deconsolidated | — | | | (24,112) | | Issuance of notes receivable, net | (9,800) | | | — | | Proceeds from note receivable | 6,397 | | | 3,544 | | Investments in securities, net | 2,551 | | | (2,132) | | Net cash used in investing activities | $ | (613,719) | | | $ | (1,015,091) | |
Cash used in investing activities changed primarily due to the following:
| | (1) | On May 15, 2017, we acquired 103 Carnegie Center located in Princeton, New Jersey for a purchase price of approximately $16.0 million in cash, including transaction costs. |
(1)On April 22, 2016,June 26, 2020, we completed the acquisition of real property at 777 Harrison Street (known as Fourth + Harrison and formerly known as 425 Fourth Street) located in San Francisco, California for a gross purchase price, including entitlements, totaling approximately $140.1 million. On July 31, 2020 and December 16, 2020, we acquired 3625-3635 Peterson Wayreal property at 759 Harrison Street located in Santa Clara,San Francisco, California, which is expected to be included in the Fourth + Harrison development project, for an aggregate purchase price totaling approximately $4.5 million. 759 Harrison Street and Fourth + Harrison are expected to support the development of approximately 850,000 square feet of primarily commercial office space.
On January 10, 2019, we acquired land parcels at our Carnegie Center property located in Princeton, New Jersey for a gross purchase price of approximately $78.0$51.5 million, which includes an aggregate of approximately $8.6 million of additional amounts that are payable in the future to the seller upon the development or sale of each of the parcels. The land parcels will support approximately 1.7 million square feet of development. On August 27, 2019, we acquired 880 and 890 Winter Street located in Waltham, Massachusetts for a gross purchase price of approximately $106.0 million in cash.cash, including transaction costs. 880 and 890 Winter | | (2) | Construction in progress for the year ended December 31, 2017 includes ongoing expenditures associated with Reservoir Place North, 888 Boylston Street and the Prudential Center retail expansion, which were fully placed in-service during the year ended December 31, 2017. In addition, we incurred costs associated with our continued development/redevelopment of Salesforce Tower, One Five Nine East 53rd Street (the low-rise portion of 601 Lexington Avenue), 191 Spring Street, 145 Broadway, 6595 Springfield Center Drive, 20 CityPoint and MacArthur Station Residences, Proto Kendall Square and Signature at Reston residential projects. |
Street consists of two Class A office properties aggregating approximately 392,000 net rentable square feet. (2)Construction in progress for the year ended December 31, 20162020 includes ongoing expenditures associated with 601 Massachusetts Avenue, 804 Carnegie Center, 1020 CityPoint, Reservoir Place North, 888 Boylston17Fifty Presidents Street and The Skylyne, which were completed and fully placed in-service during the Prudential Center retail expansion,year ended December 31, 2020. In addition, we incurred costs associated with our continued development/redevelopment of One Five Nine East 53rd Street, 200 West Street, 325 Main Street, 2100 Pennsylvania Avenue and Reston Next (formerly Reston Gateway). Construction in progress for the year ended December 31, 2019 includes ongoing expenditures associated with Salesforce Tower, which was placed in-service during the year ended December 31, 2018 and 20 CityPoint and 145 Broadway, which were partially or fully placed in-service during the year ended December 31, 2016.2019. In addition, we incurred costs associated with our continued developmentdevelopment/redevelopment of Salesforce Tower,17Fifty Presidents Street, The Skylyne, One Five Nine East 53rd Street, (the low-rise portion of 601 Lexington Avenue), 191 Spring200 West Street, 325 Main Street, 2100 Pennsylvania Avenue and Proto Kendall Square and Signature at Reston residential projects.Next (formerly Reston Gateway). | | (3) | On April 19, 2017, we completed the sale of an approximately 9.5-acre parcel of land at 30 Shattuck Road located in Andover, Massachusetts for a gross sale price of $5.0 million. Net cash proceeds totaled approximately $5.0 million. |
(3)On June 13, 2017,February 20, 2020, we completed the sale of 40 Shattuck RoadNew Dominion Technology Park located in Andover, Massachusetts for a gross sale price of $12.0 million. Net cash proceeds totaled approximately $11.9 million. On August 30, 2017, we completed the sale of our Reston Eastgate property located in Reston,Herndon, Virginia for a gross sale price of $14.0$256.0 million. Net cash proceeds totaled approximately $13.2 million.$254.0 million, resulting in a gain on sale of real estate totaling approximately $192.3 million for BXP and approximately $197.1 million for BPLP. New Dominion Technology Park is comprised of two Class A office properties aggregating approximately 493,000 net rentable square feet.
On AugustJune 25, 2020, we completed the sale of a portion of our Capital Gallery property located in Washington, DC for a gross sale price of approximately $253.7 million. Net cash proceeds totaled approximately $246.6 million, resulting in a gain on sale of real estate totaling approximately $203.5 million for BXP and approximately $207.0 million for BPLP. Capital Gallery is an approximately 631,000 net rentable square foot Class A office property. The portion sold is comprised of approximately 455,000 net rentable square feet of commercial office space. We continue to own the land, underground parking garage and remaining commercial office and retail space containing approximately 176,000 net rentable square feet at the property. On December 16, 2016,2020, we completed the sale of a parcel of land within our Broad Run Business Park property located in Loudoun County, Virginia. Net cash proceeds totaled approximately $17.9 million.
On February 1, 2016, we completed the sale of our 415 Main Street property located in Cambridge,Marlborough, Massachusetts to the tenant for a gross sale price of approximately $105.4$14.3 million. Net cash proceeds totaled approximately $104.9$14.2 million, resulting in a gain on sale of real estate totaling approximately $5.2 million. As
On January 24, 2019, we completed the sale of our 2600 Tower Oaks Boulevard property located in Rockville, Maryland for a gross sale price of approximately $22.7 million. Net cash proceeds totaled approximately $21.4 million, resulting in a loss on sale of real estate totaling approximately $0.6 million. 2600 Tower Oaks Boulevard is an approximately 179,000 net rentable square foot Class A office property. On June 3, 2019, we completed the sale of our One Tower Center property located in East Brunswick, New Jersey for a gross sale price of $38.0 million. Net cash proceeds totaled approximately $36.6 million. One Tower Center is an approximately 410,000 net rentable Class A office property. On June 28, 2019, we completed the sale of our 164 Lexington Road property located in Billerica, Massachusetts for a gross sale price of $4.0 million. Net cash proceeds totaled approximately $3.8 million, resulting in a gain on sale of real estate totaling approximately $2.5 million for BXP and approximately $2.6 million for BPLP. 164 Lexington Road is an approximately 64,000 net rentable square foot Class A office property. On September 20, 2019, we sold a 45% interest in our Platform 16 property located in San Jose, California for a gross sale price of approximately $23.1 million. Net cash proceeds totaled approximately $23.1 million. We ceased accounting for the property on a consolidated basis and now account for the property on an unconsolidated basis using the equity method of accounting as we reduced our ownership interest in the
property and no longer have a controlling financial or operating interest in the property. We did not recognize a gain on the retained or sold interest in the property as the fair value of the property approximated its carrying value. Platform 16 consists of a 65-year ground lease for land totaling approximately 5.6 acres that will support the development of approximately 1.1 million square feet of commercial office space. On December 20, 2019, we completed the sale of the remaining parcel of land at our Washingtonian North property located in Gaithersburg, Maryland for a gross sale price of approximately $7.8 million. Net cash proceeds totaled approximately $7.3 million, resulting in a loss on sale of real estate totaling approximately $0.1 million. (4)Capital contributions to unconsolidated joint ventures for the year ended December 31, 2016, we had released from escrow2020 consisted primarily of cash contributions of approximately $104.7$79.3 million, of the proceeds that were being held for possible investment in a like-kind exchange in accordance with Section 1031 of the Internal Revenue Code.$46.3 million, $27.2 million, $7.5 million and $7.4 million to our Platform 16, 3 Hudson Boulevard, Beach Cities Media Campus, Dock 72 and Metropolitan Square joint ventures, respectively. | | (4) | On August 7, 2017, we deposited $25.0 million into an escrow account to be contributed by us to the unconsolidated joint venture that is developing 7750 Wisconsin Avenue to fund future development costs. |
| | (5) | Capital contributions to unconsolidated joint ventures for the year ended December 31, 2017 consisted primarily of cash contributions of approximately $38.4 million, $45.4 million and $21.6 million to our Dock 72, Hub on Causeway and 7750 Wisconsin Avenue joint ventures, respectively. |
Capital contributions to unconsolidated joint ventures for the year ended December 31, 2016 were2019 consisted primarily due toof cash contributions of approximately $507.1$45.0 million, to fund our acquisition of a 49.8% interest in Colorado Center on July 1, 2016. In addition, we had capital contributions of approximately $33.1$20.4 million, $22.2$12.8 million and $13.1$7.2 million to our Hub on Causeway, 3 Hudson Boulevard, Dock 72 and 1265 Main StreetMetropolitan Square joint ventures, respectively,respectively. (5)Capital distributions from unconsolidated joint ventures for the year ended December 31, 2020 consisted of (1) a cash distribution totaling approximately $22.5 million from our Metropolitan Square joint venture resulting from the excess proceeds from the refinancing of the mortgage loan on the property, (2) a cash distribution totaling approximately $17.9 million from our Annapolis Junction joint venture resulting from available cash and the net proceeds from the sale of Annapolis Junction Building Eight and two land parcels after the pay down of the mortgage loan and (3) a cash distribution totaling approximately $14.0 million from our Colorado Center joint venture resulting from the excess proceeds from the mortgage financing on the property that occurred during 2017, which proceeds were primarily used to fund development activities.released from lender reserves. | | (6) | Capital distributions from unconsolidated joint ventures for the year ended December 31, 2017 consisted of a cash distribution of $251.0 million from our Colorado Center joint venture resulting from the proceeds of the new mortgage financing. |
Capital distributions from unconsolidated joint ventures for the year ended December 31, 2016 were primarily due to a return2019 consisted of capital made by the(1) cash distributions totaling approximately $104.1 million from our 540 Madison Avenue joint venture that owns 1265 Mainresulting from the net proceeds from the sale of the property, (2) a cash distribution totaling approximately $17.6 million from our 100 Causeway Street located in Waltham, MA. On December 8, 2016, the joint venture obtained mortgage financing totaling $40.4 million collateralized by the property and subsequently distributedresulting from the proceeds offrom the mortgageconstruction loan financing and (3) a cash distribution totaling approximately $15.1 million from our 7750 Wisconsin Avenue joint venture resulting from the proceeds from the construction loan financing. | | (7) | On October 20, 2016, we and our partner in the unconsolidated joint venture that owns Metropolitan Square located in Washington, DC, completed the sale of an 80% interest in the joint venture for a gross sale price of approximately $282.4 million, including the assumption by the buyer of its pro rata share of the mortgage loan collateralized by the property totaling approximately $133.4 million. In addition, the buyer agreed to assume certain unfunded leasing costs totaling approximately $14.2 million. Net proceeds to us totaled approximately $58.2 million, resulting in a gain on sale of investment totaling approximately $59.4 million. Prior to the sale, we owned a 51% interest and our partner owned a 49% interest in the joint venture. Following the sale, we continue to own a 20% interest in the joint venture with the buyer owning the remaining 80%. Metropolitan Square is an approximately 607,000 net rentable square foot Class A office property. |
Cash provided by financing activities for the year ended December 31, 20172020 totaled approximately $0.1 billion.$484.3 million. This consisted primarily of the net proceeds from the refinancingissuance by BPLP of the 767 Fifth Avenue (the General Motors Building) debt partially$1.25 billion in aggregate principal amount of its 3.250% senior unsecured notes due 2031, partially offset by the payment of our regular dividends and distributions to our shareholders and unitholders.unitholders and distributions to noncontrolling interest holders in property partnerships. Future debt payments are discussed below under the heading “Capitalization—Debt Financing.” Capitalization The following table presents Consolidated Market Capitalization and BXP’s Share of Market Capitalization, as well as the corresponding ratios of Consolidated Debt to Consolidated Market Capitalization and BXP’s Share of Debt to BXP’s Share of Market Capitalization (dollars in thousands)(in thousands except for percentages):
| | | | December 31, 2017 | | | December 31, 2020 | | | | Shares / Units Outstanding | | Common Stock Equivalent | | Equivalent Value (1) | | | Shares / Units Outstanding | | Common Stock Equivalent | | Equivalent Value (1) | | Common Stock | | 154,325,286 |
| | 154,325,286 |
| | $ | 20,066,917 |
| | Common Stock | | 155,719 | | | 155,719 | | | $ | 14,720,117 | | | Common Operating Partnership Units | | 17,628,721 |
| | 17,628,721 |
| | 2,292,263 |
| (2) | Common Operating Partnership Units | | 17,373 | | | 17,373 | | | 1,642,270 | | (2) | 5.25% Series B Cumulative Redeemable Preferred Stock | | 80,000 |
| | — |
| | 200,000 |
| | 5.25% Series B Cumulative Redeemable Preferred Stock | | 80 | | | — | | | 200,000 | | | Total Equity | | | | 171,954,007 |
| | $ | 22,559,180 |
| | Total Equity | | 173,092 | | | $ | 16,562,387 | | | | | | | | | | | | | | | | Consolidated Debt | | | | | | $ | 10,271,611 |
| | Consolidated Debt | | $ | 13,047,758 | | | Add: | | | | | | | | Add: | | BXP’s share of unconsolidated joint venture debt (3) | | | | | | 604,845 |
| | BXP’s share of unconsolidated joint venture debt (3) | | 1,153,628 | | | Subtract: | | | | | | | | Subtract: | | Partners’ share of Consolidated Debt (4) | | | | | | (1,209,280 | ) | | Partners’ share of Consolidated Debt (4) | | (1,194,619) | | | BXP’s Share of Debt | | | | | | $ | 9,667,176 |
| | BXP’s Share of Debt | | $ | 13,006,767 | | | | | | | | | | | | | | Consolidated Market Capitalization | | | | | | $ | 32,830,791 |
| | Consolidated Market Capitalization | | $ | 29,610,145 | | | BXP’s Share of Market Capitalization | | | | | | $ | 32,226,356 |
| | BXP’s Share of Market Capitalization | | $ | 29,569,154 | | | Consolidated Debt/Consolidated Market Capitalization | | | | | | 31.29 | % | | Consolidated Debt/Consolidated Market Capitalization | | 44.07 | % | | BXP’s Share of Debt/BXP’s Share of Market Capitalization | | | | | | 30.00 | % | | BXP’s Share of Debt/BXP’s Share of Market Capitalization | | 43.99 | % | |
_______________ | | (1) | Except for the Series B Cumulative Redeemable Preferred Stock, which have been valued at the liquidation preference of $2,500 per share, values are based on the closing price per share of BXP’s Common Stock on December 29, 2017 of $130.03. |
| | (2) | Includes 818,343 long-term incentive plan units (including 118,067 2012 OPP Units, 85,405 2013 MYLTIP Units and 25,107 2014 MYLTIP Units), but excludes an aggregate of 1,239,978 MYLTIP Units granted between 2015 and 2017. |
| | (3) | See page 107 for additional information. |
| | (4) | See page 95 for additional information. |
(1)Except for the Series B Cumulative Redeemable Preferred Stock, which is valued at the liquidation preference of $2,500 per share, values are based on the closing price per share of BXP’s Common Stock on the New York Stock Exchange on December 31, 2020 of $94.53.
(2)Includes long-term incentive plan units (including 2012 OPP Units and 2013 - 2017 MYLTIP Units), but excludes MYLTIP Units granted between 2018 and 2020. (3)See page 108 for additional information. (4)See page 100 for additional information.
Consolidated Debt to Consolidated Market Capitalization Ratio is a measure of leverage commonly used by analysts in the REIT sector. We present this measure as a percentage and it is calculated by dividing (A) our consolidated debt by (B) our consolidated market capitalization, which is the market value of our outstanding equity securities plus our consolidated debt. Consolidated market capitalization is the sum of: (1) our consolidated debt; plus (2) the product of (x) the closing price per share of BXP common stock on December 29, 2017,31, 2020, as reported by the New York Stock Exchange, multiplied by (y) the sum of: | | (i) | the number of outstanding shares of common stock of BXP, |
| | (ii) | the number of outstanding OP Units in BPLP (excluding OP Units held by BXP), |
| | (iii) | the number of OP Units issuable upon conversion of all outstanding LTIP Units, assuming all conditions have been met for the conversion of the LTIP Units, and |
| | (iv) | the number of OP Units issuable upon conversion of 2012 OPP Units, 2013 MYLTIP Units and 2014 MYLTIP Units that were issued in the form of LTIP Units; plus |
(i) the number of outstanding shares of common stock of BXP, (ii) the number of outstanding OP Units in BPLP (excluding OP Units held by BXP), (iii) the number of OP Units issuable upon conversion of all outstanding LTIP Units, assuming all conditions have been met for the conversion of the LTIP Units, and (iv) the number of OP Units issuable upon conversion of 2012 OPP Units, 2013 - 2017 MYLTIP Units that were issued in the form of LTIP Units; plus (3) the aggregate liquidation preference ($2,500 per share) of the outstanding shares of BXP’s 5.25% Series B Cumulative Redeemable Preferred Stock. The calculation of consolidated market capitalization does not include LTIP Units issued in the form of MYLTIP Awards unless and until certain performance thresholds are achieved and they are earned. Because their three-year performance periods hadhave not yet ended, as of December 31, 2017, 2015, 2016 and 20172018 - 2020 MYLTIP Units (See Note 20 to the Consolidated Financial Statements) are not included in this calculation.calculation as of December 31, 2020.
We also present BXP’s Share of Market Capitalization and BXP’s Share of Debt/BXP’s Share of Market Capitalization, which isare calculated in the same manner, except that BXP’s Share of Debt is utilized instead of our consolidated debt in both the numerator and the denominator. BXP’s Share of Debt is defined as our consolidated debt plus our share of debt from our unconsolidated joint ventures (calculated based upon our ownership percentage), minus our partners’ share of debt from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests)interests adjusted for basis differentials). Management believes that BXP’s Share of Debt provides useful information to investors regarding our financial condition because it includes our share of debt from unconsolidated joint ventures and excludes our partners’ share of debt from consolidated joint ventures, in each case presented on the same basis. We have several significant joint ventures and presenting various measures of financial condition in this manner can help investors better understand our financial condition and/or results of operations after taking into account our economic interest in these joint ventures. We caution investors that the ownership percentages used in calculating BXP’s Share of Debt may not completely and accurately depict all of the legal and economic implications of holding an interest in a consolidated or unconsolidated joint venture. For example, in addition to partners’ interests in profits and capital, venture agreements vary in the allocation of rights regarding decision making (both for routine and major decisions), distributions, transferability of interests, financing and guarantees, liquidations and other matters. Moreover, in some cases we exercise significant influence over, but do not control, the joint venture in which case GAAP requires that we account for the joint venture entity using the equity method of accounting and we do not consolidate it for financial reporting purposes. In other cases, GAAP requires that we consolidate the venture even though our partner(s) own(s) a significant percentage interest. As a result, presentationsmanagement believes that the presentation of BXP’s Share of a financial measure should not be considered a substitute for, and should only be considered with and as a supplement to our financial information presented in accordance with GAAP. We present these supplemental ratios because our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes and because different investors and lenders consider one or both of these ratios. Investors should understand that these ratios are, in part, a function of the market price of the common stock of BXP and as such will fluctuate with changes in such price, and they do not necessarily reflect our capacity to incur additional debt to finance our activities or our ability to manage our existing debt obligations. However, for a company like BXP, whose assets are primarily income-producing real estate, these ratios may provide investors with an alternate indication of leverage, so long as they are evaluated along with the ratio of indebtedness to other measures of asset value used by financial analysts and other financial ratios, as well as the various components of our outstanding indebtedness. For a discussion of our unconsolidated joint venture indebtedness, see “Liquidity and Capital Resources—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness” within “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.Operations” and for a discussion of our consolidated joint venture indebtedness see “Liquidity and Capital Resources—Capitalization—Mortgage Notes Payable, Net” and “—Mezzanine Notes Payable” and “Outside Members’ Notes Payable” within “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Debt Financing As of December 31, 2017,2020, we had approximately $10.3$13.0 billion of outstanding consolidated indebtedness, representing approximately 31.29%44.07% of our Consolidated Market Capitalization as calculated above consisting of approximately (1) $7.247$9.6 billion (net of discount)discount and deferred financing fees) in publicly traded unsecured senior notes having a GAAP weighted-average interest rate of 4.15%3.71% per annum and maturities in 20192021 through 2026,2031 (See Notes 8 and 18 to the Consolidated Financial Statements), (2) $3.0$2.9 billion (net of deferred financing fees) of property-specific mortgage debt having a GAAP weighted-average interest rate of 3.95%3.89% per annum and a weighted-average term of 8.25.3 years and (3) $45.0$499.4 million (net of deferred financing fees) outstanding under BPLP'sBPLP’s 2017 Credit Facility that matures on April 24, 2022.
The table below summarizes the aggregate carrying value of our mortgage notes payable mezzanine notes payable and outside members’ notes payable, BPLP’s unsecured senior notes, unsecured line of credit and term loan, andas well as Consolidated Debt Financing Statistics at December 31, 20172020 and December 31, 2016. Because the outside members’ notes payable are allocated to the partners they have not been included in the Consolidated Debt Financing Statistics.2019.
| | | December 31, | | December 31, | | 2017 | | 2016 | | 2020 | | 2019 | | (Dollars in thousands) | | (dollars in thousands) | Debt Summary: | | | | Debt Summary: | | Balance | | | | Balance | | Fixed rate mortgage notes payable, net | $ | 2,979,281 |
| | $ | 2,063,087 |
| Fixed rate mortgage notes payable, net | $ | 2,909,081 | | | $ | 2,922,408 | | Variable rate mortgage notes payable | — |
| | — |
| | Unsecured senior notes, net of discount | 7,247,330 |
| | 7,245,953 |
| | Unsecured senior notes, net | | Unsecured senior notes, net | 9,639,287 | | | 8,390,459 | | Unsecured line of credit | 45,000 |
| | — |
| Unsecured line of credit | — | | | — | | Unsecured term loan | — |
| | — |
| | Mezzanine notes payable | — |
| | 307,093 |
| | Outside members' notes payable | — |
| | 180,000 |
| | Unsecured term loan, net | | Unsecured term loan, net | 499,390 | | | 498,939 | | Consolidated Debt | 10,271,611 |
| | 9,796,133 |
| Consolidated Debt | 13,047,758 | | | 11,811,806 | | Add: | | | | Add: | | BXP's share of unconsolidated joint venture debt, net (1) | 604,845 |
| | 318,193 |
| | BXP’s share of unconsolidated joint venture debt, net (1) | | BXP’s share of unconsolidated joint venture debt, net (1) | 1,153,628 | | | 980,110 | | Subtract: | | | | Subtract: | | Partners’ share of consolidated mortgage notes payable, net (2) | (1,209,280 | ) | | (841,636 | ) | Partners’ share of consolidated mortgage notes payable, net (2) | (1,194,619) | | | (1,199,854) | | Partners’ share of consolidated mezzanine notes payable | — |
| | (122,837 | ) | | Outside members' notes payable | — |
| | (180,000 | ) | | BXP’s Share of Debt | $ | 9,667,176 |
| | $ | 8,969,853 |
| BXP’s Share of Debt | $ | 13,006,767 | | | $ | 11,592,062 | | | | | | | | | | | December 31, | | December 31, | | 2017 | | 2016 | | 2020 | | 2019 | Consolidated Debt Financing Statistics: | | | | Consolidated Debt Financing Statistics: | | | | Percent of total debt: | | | | Percent of total debt: | | Fixed rate | 99.56 | % | | 100.00 | % | Fixed rate | 96.17 | % | | 95.78 | % | Variable rate | 0.44 | % | | — | % | Variable rate | 3.83 | % | | 4.22 | % | Total | 100.00 | % | | 100.00 | % | Total | 100.00 | % | | 100.00 | % | GAAP Weighted-average interest rate at end of period: | | | | GAAP Weighted-average interest rate at end of period: | | | | Fixed rate | 4.09 | % | | 4.06 | % | Fixed rate | 3.75 | % | | 3.80 | % | Variable rate | 2.46 | % | | — | % | Variable rate | 1.19 | % | | 2.75 | % | Total | 4.08 | % | | 4.06 | % | Total | 3.65 | % | | 3.75 | % | Coupon/Stated Weighted-average interest rate at end of period: | | | | Coupon/Stated Weighted-average interest rate at end of period: | | | | Fixed rate | 3.98 | % | | 4.50 | % | Fixed rate | 3.65 | % | | 3.69 | % | Variable rate | 2.35 | % | | — | % | Variable rate | 1.10 | % | | 2.66 | % | Total | 3.98 | % | | 4.50 | % | Total | 3.55 | % | | 3.65 | % | Weighted-average maturity at end of period (in years): | | | | Weighted-average maturity at end of period (in years): | | | | Fixed rate | 6.4 |
| | 5.0 |
| Fixed rate | 5.5 | | | 6.0 | | Variable rate | 4.3 |
| | — |
| Variable rate | 1.3 | | | 2.3 | | Total | 6.4 |
| | 5.0 |
| Total | 5.4 | | | 5.9 | |
_______________ | | (1) | See page 107 for additional information. |
| | (2) | See page 95 for additional information. |
(1)See page 108 for additional information. (2)See page 100 for additional information. Unsecured Credit Facility On April 24, 2017, BPLP entered into the 2017 Credit Facility. Among other things, the 2017 Credit Facility (1) increased the total commitment of the Revolving Facility from $1.0 billion to $1.5 billion, (2) extended the maturity date from July 26, 2018 to April 24, 2022, (3) reduced the per annum variable interest rates, and (4) added a $500.0$500.0 million Delayed Draw Facility that permitspermitted BPLP to draw until the first anniversary of the closing date. Based on BPLP’s current credit rating, (1) the applicable Eurocurrency margins for the Revolving Facility and Delayed Draw Facility are 87.5 basis points and 95 basis points, respectively, and (2) the facility fee on the
Revolving Facility commitment is 0.15% per annum.
On April 24, 2018, BPLP exercised its option to draw $500.0 million on its Delayed Draw Facility. The Delayed Draw Facility hasbears interest at a fee on unused commitmentsvariable rate equal to 0.15%LIBOR plus 0.90% per annum (See Note 9 to the Consolidated Financial Statements).based on BPLP’s December 31, 2020 credit rating and matures on April 24, 2022. As of December 31, 2017,2020, BPLP had $45.0$500.0 million of borrowings outstanding under its Delayed Draw Facility, no borrowings under its Revolving Facility and letters of credit totaling approximately $1.6$2.5 million outstanding in each case, under the 2017 Credit Facility, andwith the ability to borrow up to $2.0 billion.approximately $1.5 billion under the Revolving Facility. As of February 22, 2018,2021, BPLP had approximately $210$500.0 million of borrowings outstanding under its Delayed Draw Facility, no borrowings under its Revolving Facility and letters of credit totaling approximately $1.6$2.3 million outstanding under the 2017 Credit Facility, andwith the ability to borrow approximately $1.8 billion.$1.5 billion under the Revolving Facility. Unsecured Senior Notes, Net For a description of BPLP'sBPLP’s outstanding unsecured senior notes as of December 31, 2017,2020, see NoteNotes 8 and 18 to the Consolidated Financial Statements. On December 4, 2017,May 5, 2020, BPLP completed a public offering of $850 million$1.25 billion in aggregate principal amount of its 3.200%3.250% unsecured senior notes due 2025.2031. The notes were priced at 99.757%99.850% of the principal amount to yield an effective rate (including financing fees) of approximately 3.350%3.343% per annum to maturity. The notes will mature on January 15, 2025,30, 2031, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $841.1 million$1.24 billion after deducting underwriting discounts and transaction expenses. On December 17, 2017, BPLP completed the redemption of $850 million in aggregate principal amount of its 3.700% senior notes due November 15, 2018. The redemption price was approximately $865.5 million, which included approximately $2.8 million of accrued and unpaid interest to, but not including, the redemption date. Excluding the accrued and unpaid interest, the redemption price was approximately 101.49% of the principal amount being redeemed. We recognized a loss from early extinguishment of debt totaling approximately $13.9 million, which amount included the payment of the redemption premium totaling approximately $12.7 million.
The indenture under which ourrelating to the unsecured senior notes were issued contains certain financial restrictions on incurring debt and using our assets as security in other financing transactions and other customary financial and other covenants,requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 50%, (3) an interest coverage ratio of greater than 1.50, and (4) an unencumbered asset value to be noof not less than 150% of our unsecured debt. As ofAt December 31, 2017,2020, BPLP believes it was in compliance with each of these financial restrictions and requirements. Mortgage Notes Payable, Net The following represents the outstanding principal balances due under the mortgage notes payable at December 31, 2017:2020: | | Properties | | Stated Interest Rate | | GAAP Interest Rate (1) | | Stated Principal Amount | | Deferred Financing Costs, Net | | Carrying Amount | | Carrying Amount (Partners’ Share) | | | | Maturity Date | Properties | | Stated Interest Rate | | GAAP Interest Rate (1) | | Stated Principal Amount | | Deferred Financing Costs, Net | | Carrying Amount | | Carrying Amount (Partners’ Share) | | Maturity Date | | | (dollars in thousands) | | | (dollars in thousands) | Wholly-owned | | | | | | | | | | | | | | Wholly-owned | | New Dominion Tech Park, Bldg. One | | 7.69 | % | | 7.84 | % | | $ | 32,944 |
| | $ | (253 | ) | | $ | 32,691 |
| | N/A |
| | | | January 15, 2021 | | University Place | | 6.94 | % | | 6.99 | % | | 7,453 |
| | (46 | ) | | 7,407 |
| | N/A |
| | | | August 1, 2021 | University Place | | 6.94 | % | | 6.99 | % | | $ | 1,500 | | | $ | (9) | | | $ | 1,491 | | | N/A | | August 1, 2021 | | | | | | | 40,397 |
| | (299 | ) | | 40,098 |
| | N/A |
| | | Consolidated Joint Ventures | Consolidated Joint Ventures | | | | | | | | | | | | Consolidated Joint Ventures | | 767 Fifth Avenue (the General Motors Building) | | 3.43 | % | | 3.64 | % | | 2,300,000 |
| | (32,959 | ) | | 2,267,041 |
| | $ | 906,816 |
| | (2)(3)(4) | | June 9, 2027 | 767 Fifth Avenue (the General Motors Building) | | 3.43 | % | | 3.64 | % | | 2,300,000 | | | (22,478) | | | 2,277,522 | | | $ | 911,088 | | | (2)(3)(4) | | June 9, 2027 | 601 Lexington Avenue | | 4.75 | % | | 4.79 | % | | 673,564 |
| | (1,422 | ) | | 672,142 |
| | 302,464 |
| | (5) | | April 10, 2022 | 601 Lexington Avenue | | 4.75 | % | | 4.79 | % | | 630,486 | | | (418) | | | 630,068 | | | 283,531 | | | (5) | | April 10, 2022 | | | | | | | 2,973,564 |
| | (34,381 | ) | | 2,939,183 |
| | 1,209,280 |
| | | 2,930,486 | | | (22,896) | | | 2,907,590 | | | 1,194,619 | | | Total | | | | | | $ | 3,013,961 |
| | $ | (34,680 | ) | | $ | 2,979,281 |
| | $ | 1,209,280 |
| | | | Total | | $ | 2,931,986 | | | $ | (22,905) | | | $ | 2,909,081 | | | $ | 1,194,619 | | |
_______________ | | (1) | GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges and the effects of hedging transactions. |
| | (2) | The mortgage loan requires interest only payments with a balloon payment due at maturity. |
| | (3) | This property is owned by a consolidated entity in which we have a 60% interest. |
(1)GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges and the effects of hedging transactions (if any).
| | (4) | In connection with the refinancing of the loan, we guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of December 31, 2017, the maximum funding obligation under the guarantee was approximately $193.4 million. We earn a fee from the joint venture for providing the guarantee and have an agreement with the outside partners to reimburse the joint venture for their share of any payments made under the guarantee (See Notes 6 and 10 to the Consolidated Financial Statements). |
| | (5) | This property is owned by a consolidated entity in which we have a 55% interest. |
(2)The mortgage loan requires interest only payments with a balloon payment due at maturity.
(3)This property is owned by a consolidated entity in which we have a 60% interest. The partners’ share of the carrying amount has been adjusted for basis differentials. (4)In connection with the refinancing of the loan, we guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of December 31, 2020, the maximum funding obligation under the guarantee was approximately $30.6 million. We earn a fee from the joint venture for providing the guarantee and have an agreement with our partners to reimburse the joint venture for their share of any payments made under the guarantee (See Note 10 to the Consolidated Financial Statements). (5)This property is owned by a consolidated entity in which we have a 55% interest.
Contractual aggregate principal payments of mortgage notes payable at December 31, 20172020 are as follows: | | | | | | | Principal Payments | Year | (in thousands) | 2021 | $ | 17,276 | | 2022 | 614,710 | | 2023 | — | | 2024 | — | | 2025 | — | | Thereafter | 2,300,000 | | | $ | 2,931,986 | |
| | | | | | Principal Payments | Year | (in thousands) | 2018 | $ | 18,633 |
| 2019 | 19,670 |
| 2020 | 20,766 |
| 2021 | 40,182 |
| 2022 | 614,710 |
| Thereafter | 2,300,000 |
| | $ | 3,013,961 |
|
Market Risk Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Our primary market risk results from our indebtedness, which bears interest at fixed and variable rates. The fair value of our debt obligations are affected by changes in the market interest rates. We manage our market risk by matching long-term leases with long-term, fixed-rate, non-recourse debt of similar duration. We continue to follow a conservative strategy of generally pre-leasing development projects on a long-term basis to creditworthy tenants in order to achieve the most favorable construction and permanent financing terms. Approximately 99.6%96.2% of our outstanding debt, excluding our unconsolidated joint ventures, has fixed interest rates, which minimizes the interest rate risk through the maturity of such outstanding debt. We also manage our market risk by entering into hedging arrangements with financial institutions. Our primary objectives when undertaking hedging transactions and derivative positions is to reduce our floating rate exposure and to fix a portion of the interest rate for anticipated financing and refinancing transactions. This in turn, reduces the risks that the variability of cash flows imposes on variable rate debt. Our strategy mitigates against future increases in our interest rates. At December 31, 2017,2020, our weighted-average coupon/stated rate on our fixed rate outstanding Consolidated Debt was 3.98%3.65% per annum. At December 31, 2017,2020, we had $45.0$500.0 million outstanding of consolidated variable rate debt. At December 31, 2017,2020, the GAAP interest rate on our variable rate debt was approximately 2.46%.1.19% per annum. If market interest rates on our variable rate debt had been 100 basis points greater, total interest expense would have increased approximately $450,000$5.0 million, on an annualized basis, for the year ended December 31, 2017.2020. Funds from Operations Pursuant to the revised definition of Funds from Operations adopted by the Board of Governors of Nareitthe National Association of Real Estate Investment Trusts (“Nareit”), we calculate Funds from Operations, or “FFO,” for each of BXP and BPLP by adjusting net income (loss) attributable to Boston Properties, Inc. common shareholders and net income (loss) attributable to Boston Properties Limited Partnership common unitholders respectively, (computed in accordance with GAAP), respectively, for gains (or losses) from sales of properties, impairment losses on depreciable real estate consolidated on our balance sheet, impairment losses on our investments in unconsolidated joint ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated joint ventures and our share of real estate-related depreciation and amortization. FFO is a non-GAAP financial measure, but wemeasure. We believe the presentation of FFO, combined with the presentation of required GAAP financial measures, has improvedimproves the understanding of operating results of REITs among the investing public and has helpedhelps make comparisons of REIT operating results more meaningful. Management generally considers FFO to be useful measures for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO can help
investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current Nareit definition or that interpret the current Nareit definition differently. We believe that in order to facilitate a clear understanding of our operating results, FFO should be examined in conjunction with net income attributable to Boston Properties, Inc. common shareholders and net
income attributable to Boston Properties Limited Partnership as presented in our Consolidated Financial Statements. FFO should not be considered as a substitute for net income attributable to Boston Properties, Inc. common shareholders or net income attributable to Boston Properties Limited Partnership common unitholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP. The impact that COVID-19 has had on our business, financial position and results of operations during 2020 is discussed throughout this report. The full extent of the impact of COVID-19 on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. The impact of COVID-19 on our revenue, in particular lease, parking and hotel revenue was negatively impacted by COVID-19 for the year ended December 31, 2020, thus negatively impacting our FFO. These decreases are discussed under the heading “Comparison of the year ended December 31, 2020 to the year ended December 31, 2019” within “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Boston Properties, Inc. The following table presents a reconciliation of net income attributable to Boston Properties, Inc. common shareholders to FFO attributable to Boston Properties, Inc. common shareholders for the years ended December 31, 2020, 2019, 2018, 2017 2016, 2015, 2014 and 2013:2016:
| | | | Year ended December 31, | | | | Year ended December 31, | | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | | | | 2020 | | 2019 | | 2018 | | 2017 | | 2016 | | | (in thousands) | | | | (in thousands) | Net income attributable to Boston Properties, Inc. common shareholders | | $ | 451,939 |
| | $ | 502,285 |
| | $ | 572,606 |
| | $ | 433,111 |
| | $ | 741,754 |
| Net income attributable to Boston Properties, Inc. common shareholders | | | $ | 862,227 | | | $ | 511,034 | | | $ | 572,347 | | | $ | 451,939 | | | $ | 502,285 | | Add: | | | | | | | | | | | Add: | | | | Preferred dividends | | 10,500 |
| | 10,500 |
| | 10,500 |
| | 10,500 |
| | 8,057 |
| Preferred dividends | | | 10,500 | | | 10,500 | | | 10,500 | | | 10,500 | | | 10,500 | | Noncontrolling interest in discontinued operations—common units of the Operating Partnership | | — |
| | — |
| | — |
| | — |
| | 14,151 |
| | Noncontrolling interest—common units of the Operating Partnership | | 52,210 |
| | 59,260 |
| | 66,951 |
| | 50,862 |
| | 70,085 |
| Noncontrolling interest—common units of the Operating Partnership | | | 97,704 | | | 59,345 | | | 66,807 | | | 52,210 | | | 59,260 | | Noncontrolling interest—redeemable preferred units of the Operating Partnership | | — |
| | — |
| | 6 |
| | 1,023 |
| | 6,046 |
| | Noncontrolling interests in property partnerships | | 47,832 |
| | (2,068 | ) | | 149,855 |
| | 30,561 |
| | 1,347 |
| Noncontrolling interests in property partnerships | | | 48,260 | | | 71,120 | | | 62,909 | | | 47,832 | | | (2,068) | | Impairment loss from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 3,241 |
| | Less: | | | | | | | | | | | | Gain on forgiveness of debt from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 20,182 |
| | Gains on sales of real estate from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 112,829 |
| | Income from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 8,022 |
| | Gains on sales of real estate | | 7,663 |
| | 80,606 |
| | 375,895 |
| | 168,039 |
| | — |
| | Income from continuing operations | | 554,818 |
| | 489,371 |
| | 424,023 |
| | 358,018 |
| | 703,648 |
| | Net income | | Net income | | | 1,018,691 | | | 651,999 | | | 712,563 | | | 562,481 | | | 569,977 | | Add: | | | | | | | | | | | Add: | | | | Depreciation and amortization | | 617,547 |
| | 694,403 |
| | 639,542 |
| | 628,573 |
| | 560,637 |
| Depreciation and amortization | | | 683,751 | | | 677,764 | | | 645,649 | | | 617,547 | | | 694,403 | | Noncontrolling interests in property partnerships’ share of depreciation and amortization | | (78,190 | ) | | (107,087 | ) | | (90,832 | ) | | (63,303 | ) | | (32,583 | ) | Noncontrolling interests in property partnerships’ share of depreciation and amortization | | | (71,850) | | | (71,389) | | | (73,880) | | | (78,190) | | | (107,087) | | BXP’s share of depreciation and amortization from unconsolidated joint ventures | | 34,262 |
| | 26,934 |
| | 6,556 |
| | 19,251 |
| | 46,214 |
| BXP’s share of depreciation and amortization from unconsolidated joint ventures | | | 80,925 | | | 58,451 | | | 54,352 | | | 34,262 | | | 26,934 | | Corporate-related depreciation and amortization | | (1,986 | ) | | (1,568 | ) | | (1,503 | ) | | (1,361 | ) | | (1,259 | ) | Corporate-related depreciation and amortization | | | (1,840) | | | (1,695) | | | (1,634) | | | (1,986) | | | (1,568) | | Depreciation and amortization from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 4,760 |
| | Income from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 8,022 |
| | Impairment loss on investment in unconsolidated joint venture (1) | | Impairment loss on investment in unconsolidated joint venture (1) | | | 60,524 | | | — | | | — | | | — | | | — | | Impairment loss | | Impairment loss | | | — | | | 24,038 | | | 11,812 | | | — | | | — | | Less: | | | | | | | | | | | Less: | | | | Gain on sale of investment in unconsolidated joint venture (1) | | — |
| | 59,370 |
| | — |
| | — |
| | — |
| | Gains on sales of real estate included within income from unconsolidated joint ventures (2) | | — |
| | — |
| | — |
| | — |
| | 54,501 |
| | Gains on consolidation of joint ventures (3) | | — |
| | — |
| | — |
| | — |
| | 385,991 |
| | Noncontrolling interests in property partnerships (4) | | 47,832 |
| | (2,068 | ) | | 48,737 |
| | 30,561 |
| | 1,347 |
| | Noncontrolling interest—redeemable preferred units of the Operating Partnership (5) | | — |
| | — |
| | 6 |
| | 1,023 |
| | 4,079 |
| | Gain on sale of investment in unconsolidated joint venture (2) | | Gain on sale of investment in unconsolidated joint venture (2) | | | — | | | — | | | — | | | — | | | 59,370 | | Gain on sale of real estate included within (loss) income from unconsolidated joint ventures (3) | | Gain on sale of real estate included within (loss) income from unconsolidated joint ventures (3) | | | 5,958 | | | 47,238 | | | 8,270 | | | — | | | — | | Gains on sales of real estate | | Gains on sales of real estate | | | 618,982 | | | 709 | | | 182,356 | | | 7,663 | | | 80,606 | | Noncontrolling interests in property partnerships | | Noncontrolling interests in property partnerships | | | 48,260 | | | 71,120 | | | 62,909 | | | 47,832 | | | (2,068) | | Preferred dividends | | 10,500 |
| | 10,500 |
| | 10,500 |
| | 10,500 |
| | 8,057 |
| Preferred dividends | | | 10,500 | | | 10,500 | | | 10,500 | | | 10,500 | | | 10,500 | | Funds from Operations (FFO) attributable to the Operating Partnership common unitholders (including Boston Properties, Inc.) | | 1,068,119 |
| | 1,034,251 |
| | 918,543 |
| | 899,094 |
| | 835,464 |
| Funds from Operations (FFO) attributable to the Operating Partnership common unitholders (including Boston Properties, Inc.) | | | 1,086,501 | | | 1,209,601 | | | 1,084,827 | | | 1,068,119 | | | 1,034,251 | | Less: | | | | | | | | | | | Less: | | | | Noncontrolling interest—common units of the Operating Partnership’s share of funds from operations | | 108,707 |
| | 106,504 |
| | 94,828 |
| | 91,588 |
| | 84,000 |
| Noncontrolling interest—common units of the Operating Partnership’s share of funds from operations | | | 108,310 | | | 123,757 | | | 110,338 | | | 108,707 | | | 106,504 | | Funds from Operations attributable to Boston Properties, Inc. common shareholders | | $ | 959,412 |
| | $ | 927,747 |
| | $ | 823,715 |
| | $ | 807,506 |
| | $ | 751,464 |
| Funds from Operations attributable to Boston Properties, Inc. common shareholders | | | $ | 978,191 | | | $ | 1,085,844 | | | $ | 974,489 | | | $ | 959,412 | | | $ | 927,747 | | Our percentage share of Funds from Operations—basic | | 89.82 | % | | 89.70 | % | | 89.68 | % | | 89.81 | % | | 89.99 | % | Our percentage share of Funds from Operations—basic | | | 90.03 | % | | 89.77 | % | | 89.83 | % | | 89.82 | % | | 89.70 | % | Weighted average shares outstanding—basic | | 154,190 |
| | 153,715 |
| | 153,471 |
| | 153,089 |
| | 152,201 |
| Weighted average shares outstanding—basic | | | 155,432 | | | 154,582 | | | 154,427 | | | 154,190 | | | 153,715 | |
_______________ | | (1) | The gain on sale of investment in unconsolidated joint venture consists of the gain on sale of a 31% interest in Metropolitan Square. We continue to own a 20% interest in the joint venture. |
(1)The impairment loss on investment in unconsolidated joint venture consists of an other-than-temporary decline in the fair value below the carrying value of our investment in the Dock 72 unconsolidated joint venture (See Note 6 to the Consolidated Financial Statements).
| | (2) | Consists of the portion of income from unconsolidated joint ventures related to (1) the gain on sale of Eighth Avenue and 46th Street totaling approximately $11.3 million and (2) the gain on sale of 125 West 55th Street totaling approximately $43.2 million. |
| | (3) | The gains on consolidation of joint ventures consisted of (1) 767 Fifth Avenue (the General Motors Building) totaling approximately $359.5 million and (2) our Value-Added Fund’s Mountain View properties totaling approximately $26.5 million. |
| | (4) | For the year ended December 31, 2015, excludes the noncontrolling interests in property partnerships’ share of a gain on sale of real estate totaling approximately $101.1 million. |
| | (5) | Excludes approximately $2.0 million for the year ended December 31, 2013 of income allocated to the holders of Series Two Preferred Units to account for their right to participate on an as-converted basis in the special dividend that was primarily the result of the sale of a 45% interest in our Times Square Tower property. |
(2)The gain on sale of investment in unconsolidated joint venture consists of the gain on sale of a 31% interest in Metropolitan Square. We continue to own a 20% interest in the joint venture.
(3)Consists of the portion of income from unconsolidated joint ventures related to the gain on sale of real estate associated with the sale of Annapolis Junction Building Eight and two land parcels for the year ended December 31, 2020, 540 Madison Avenue for the year ended December 31, 2019 and the gain on the distribution of Annapolis Junction Building One for the year ended December 31, 2018.
Reconciliation to Diluted Funds from Operations: | | | | For the years ended December 31, | | | Year ended December 31, | | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | | | 2020 | | 2019 | | 2018 | | 2017 | | 2016 | | | (Dollars in thousands) | | (in thousands) | | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | Basic Funds from Operations | | $ | 1,068,119 |
| | 171,661 |
| | $ | 1,034,251 |
| | 171,361 |
| | $ | 918,543 |
| | 171,139 |
| | $ | 899,094 |
| | 170,453 |
| | $ | 835,464 |
| | 169,126 |
| Basic Funds from Operations | | $ | 1,086,501 | | | 172,643 | | | $ | 1,209,601 | | | 172,200 | | | $ | 1,084,827 | | | 171,912 | | | $ | 1,068,119 | | | 171,661 | | | $ | 1,034,251 | | | 171,361 | | Effect of Dilutive Securities: | | | | | | | | | | | | | | | | | | | | | Effect of Dilutive Securities: | | Convertible Preferred Units (1) | | — |
| | 200 |
| | — |
| | 262 |
| | — |
| | 373 |
| | 760 |
| | 312 |
| | 3,150 |
| | 1,221 |
| | Stock based compensation and exchangeable senior notes | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 219 |
| | — |
| | 320 |
| | Stock based compensation | | Stock based compensation | | — | | | 85 | | | — | | | 301 | | | — | | | 255 | | | — | | | 200 | | | — | | | 262 | | Diluted Funds from Operations | | $ | 1,068,119 |
| | 171,861 |
| | $ | 1,034,251 |
| | 171,623 |
| | $ | 918,543 |
| | 171,512 |
| | $ | 899,854 |
| | 170,984 |
| | $ | 838,614 |
| | 170,667 |
| Diluted Funds from Operations | | $ | 1,086,501 | | | 172,728 | | | $ | 1,209,601 | | | 172,501 | | | $ | 1,084,827 | | | 172,167 | | | $ | 1,068,119 | | | 171,861 | | | $ | 1,034,251 | | | 171,623 | | Less: Noncontrolling interest—common units of the Operating Partnership’s share of diluted Funds from Operations | | 108,580 |
| | 17,471 |
| | 106,341 |
| | 17,646 |
| | 94,622 |
| | 17,668 |
| | 91,381 |
| | 17,364 |
| | 83,167 |
| | 16,925 |
| Less: Noncontrolling interest—common units of the Operating Partnership’s share of diluted Funds from Operations | | 108,256 | | | 17,211 | | | 123,541 | | | 17,618 | | | 110,175 | | | 17,485 | | | 108,580 | | | 17,471 | | | 106,341 | | | 17,646 | | Diluted Funds from Operations attributable to Boston Properties, Inc. (2) | | $ | 959,539 |
| | 154,390 |
| | $ | 927,910 |
| | 153,977 |
| | $ | 823,921 |
| | 153,844 |
| | $ | 808,473 |
| | 153,620 |
| | $ | 755,447 |
| | 153,742 |
| | Diluted Funds from Operations attributable to Boston Properties, Inc. (1) | | Diluted Funds from Operations attributable to Boston Properties, Inc. (1) | | $ | 978,245 | | | 155,517 | | | $ | 1,086,060 | | | 154,883 | | | $ | 974,652 | | | 154,682 | | | $ | 959,539 | | | 154,390 | | | $ | 927,910 | | | 153,977 | |
_______________ | | (1) | Excludes approximately $2.0 million for the year ended December 31, 2013 of income allocated to the holders of Series Two Preferred Units to account for their right to participate on an as-converted basis in the special dividend that was primarily the result of the sale of a 45% interest in our Times Square Tower property. |
| | (2) | BXP’s share of diluted Funds from Operations was 89.83%, 89.72%, 89.70%, 89.84% and 90.08% for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively. |
(1)BXP’s share of diluted Funds from Operations was 90.04%, 89.79%, 89.84%, 89.83% and 89.72% for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, respectively.
Boston Properties Limited Partnership The following table presents a reconciliation of net income attributable to Boston Properties Limited Partnership common unitholders to FFO attributable to Boston Properties Limited Partnership common unitholders for the years ended December 31, 2020, 2019, 2018, 2017 2016, 2015, 2014 and 2013:2016: | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | | | (in thousands) | Net income attributable to Boston Properties Limited Partnership common unitholders | | $ | 512,866 |
| | $ | 575,341 |
| | $ | 648,748 |
| | $ | 499,129 |
| | $ | 841,516 |
| Add: | | | | | | | | | | | Preferred distributions | | 10,500 |
| | 10,500 |
| | 10,500 |
| | 10,500 |
| | 8,057 |
| Noncontrolling interest—redeemable preferred units | | — |
| | — |
| | 6 |
| | 1,023 |
| | 6,046 |
| Noncontrolling interests in property partnerships | | 47,832 |
| | (2,068 | ) | | 149,855 |
| | 30,561 |
| | 1,347 |
| Impairment loss from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 2,852 |
| Less: | | | | | | | | | | | Gain on forgiveness of debt from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 20,736 |
| Gains on sales of real estate from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 115,459 |
| Income from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 8,022 |
| Gains on sales of real estate | | 8,240 |
| | 82,775 |
| | 377,093 |
| | 174,686 |
| | — |
| Income from continuing operations | | 562,958 |
| | 500,998 |
| | 432,016 |
| | 366,527 |
| | 715,601 |
| Add: | | | | | | | | | | | Real estate depreciation and amortization | | 609,407 |
| | 682,776 |
| | 631,549 |
| | 620,064 |
| | 552,589 |
| Noncontrolling interests in property partnerships’ share of depreciation and amortization | | (78,190 | ) | | (107,087 | ) | | (90,832 | ) | | (63,303 | ) | | (32,583 | ) | BPLP’s share of depreciation and amortization from unconsolidated joint ventures | | 34,262 |
| | 26,934 |
| | 6,556 |
| | 19,251 |
| | 46,214 |
| Corporate-related depreciation and amortization | | (1,986 | ) | | (1,568 | ) | | (1,503 | ) | | (1,361 | ) | | (1,259 | ) | Depreciation and amortization from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 4,760 |
| Income from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 8,022 |
| Less: | | | | | | | | | | | Gain on sale of investment in unconsolidated joint venture (1) | | — |
| | 59,370 |
| | — |
| | — |
| | — |
| Gains on sales of real estate included within income from unconsolidated joint ventures (2) | | — |
| | — |
| | — |
| | — |
| | 54,501 |
| Gains on consolidation of joint ventures (3) | | — |
| | — |
| | — |
| | — |
| | 385,991 |
| Noncontrolling interests in property partnerships (4) | | 47,832 |
| | (2,068 | ) | | 48,737 |
| | 30,561 |
| | 1,347 |
| Noncontrolling interest—redeemable preferred units (5) | | — |
| | — |
| | 6 |
| | 1,023 |
| | 4,079 |
| Preferred distributions | | 10,500 |
| | 10,500 |
| | 10,500 |
| | 10,500 |
| | 8,057 |
| Funds from operations attributable to Boston Properties Limited Partnership common unitholders (6) | | $ | 1,068,119 |
| | $ | 1,034,251 |
| | $ | 918,543 |
| | $ | 899,094 |
| | $ | 839,369 |
| Weighted average units outstanding—basic | | 171,661 |
| | 171,361 |
| | 171,139 |
| | 170,453 |
| | 169,126 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | | | | 2020 | | 2019 | | 2018 | | 2017 | | 2016 | | | | | | | (in thousands) | Net income attributable to Boston Properties Limited Partnership common unitholders | | | | | | $ | 979,979 | | | $ | 580,102 | | | $ | 656,903 | | | $ | 512,866 | | | $ | 575,341 | | Add: | | | | | | | | | | | | | | | Preferred distributions | | | | | | 10,500 | | | 10,500 | | | 10,500 | | | 10,500 | | | 10,500 | | Noncontrolling interests in property partnerships | | | | | | 48,260 | | | 71,120 | | | 62,909 | | | 47,832 | | | (2,068) | | Net income | | | | | | 1,038,739 | | | 661,722 | | | 730,312 | | | 571,198 | | | 583,773 | | Add: | | | | | | | | | | | | | | | Depreciation and amortization | | | | | | 676,666 | | | 669,956 | | | 637,891 | | | 609,407 | | | 682,776 | | Noncontrolling interests in property partnerships’ share of depreciation and amortization | | | | | | (71,850) | | | (71,389) | | | (73,880) | | | (78,190) | | | (107,087) | | BXP’s share of depreciation and amortization from unconsolidated joint ventures | | | | | | 80,925 | | | 58,451 | | | 54,352 | | | 34,262 | | | 26,934 | | Corporate-related depreciation and amortization | | | | | | (1,840) | | | (1,695) | | | (1,634) | | | (1,986) | | | (1,568) | | Impairment loss on investment in unconsolidated joint venture (1) | | | | | | 60,524 | | | — | | | — | | | — | | | — | | Impairment loss | | | | | | — | | | 22,272 | | | 10,181 | | | — | | | — | | Less: | | | | | | | | | | | | | | | Gain on sale of investment in unconsolidated joint venture (2) | | | | | | — | | | — | | | — | | | — | | | 59,370 | | Gain on sale of real estate included within (loss) income from unconsolidated joint ventures (3) | | | | | | 5,958 | | | 47,238 | | | 8,270 | | | — | | | — | | Gains on sales of real estate | | | | | | 631,945 | | | 858 | | | 190,716 | | | 8,240 | | | 82,775 | | Noncontrolling interests in property partnerships | | | | | | 48,260 | | | 71,120 | | | 62,909 | | | 47,832 | | | (2,068) | | Preferred distributions | | | | | | 10,500 | | | 10,500 | | | 10,500 | | | 10,500 | | | 10,500 | | Funds from Operations attributable to Boston Properties Limited Partnership common unitholders (4) | | | | | | 1,086,501 | | | 1,209,601 | | | 1,084,827 | | | 1,068,119 | | | 1,034,251 | | Weighted average shares outstanding—basic | | | | | | 172,643 | | | 172,200 | | | 171,912 | | | 171,661 | | | 171,361 | |
_______________ | | (1) | The gain on sale of investment in unconsolidated joint venture consists of the gain on sale of a 31% interest in Metropolitan Square. We continue to own a 20% interest in the joint venture. |
| | (2) | Consists of the portion of income from unconsolidated joint ventures related to (1) the gain on sale of Eighth Avenue and 46th Street totaling approximately $11.3 million and (2) the gain on sale of 125 West 55th Street totaling approximately $43.2 million. |
| | (3) | The gains on consolidation of joint ventures consisted of (1) 767 Fifth Avenue (the General Motors Building) totaling approximately $359.5 million and (2) our Value-Added Fund’s Mountain View properties totaling approximately $26.5 million. |
| | (4) | For the year ended December 31, 2015, excludes the noncontrolling interests in property partnerships’ share of a gain on sale of real estate totaling approximately $101.1 million. |
| | (5) | Excludes approximately $2.0 million for the year ended December 31, 2013 of income allocated to the holders of Series Two Preferred Units to account for their right to participate on an as-converted basis in the special distribution that was primarily the result of the sale of a 45% interest in our Times Square Tower property. |
| | (6) | Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units, vested 2013 MYLTIP Units and vested 2014 MYLTIP Units). |
Reconciliation to Diluted Funds from Operations:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the years ended December 31, | | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | | | (Dollars in thousands) | | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | Basic Funds from Operations | | $ | 1,068,119 |
| | 171,661 |
| | $ | 1,034,251 |
| | 171,361 |
| | $ | 918,543 |
| | 171,139 |
| | $ | 899,094 |
| | 170,453 |
| | $ | 839,369 |
| | 169,126 |
| Effect of Dilutive Securities: | | | | | | | | | | | | | | | | | | | | | Convertible Preferred Units (1) | | — |
| | 200 |
| | — |
| | 262 |
| | — |
| | 373 |
| | 760 |
| | 312 |
| | 3,150 |
| | 1,221 |
| Stock based compensation and exchangeable senior notes | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 219 |
| | — |
| | 320 |
| Diluted Funds from Operations | | $ | 1,068,119 |
| | 171,861 |
| | $ | 1,034,251 |
| | 171,623 |
| | $ | 918,543 |
| | 171,512 |
| | $ | 899,854 |
| | 170,984 |
| | $ | 842,519 |
| | 170,667 |
|
_______________
| | (1) | Excludes approximately $2.0 million for the year ended December 31, 2013 of income allocated to the holders of Series Two Preferred Units to account for their right to participate on an as-converted basis in the special distribution that was primarily the result of the sale of a 45% interest in our Times Square Tower property. |
Net Operating Income
(1)Thefollowing are reconciliations of Net Income Attributable to Boston Properties, Inc. Common Shareholders to Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to Net Operating Income for the or the fiscal years 2013 through 2017. Boston Properties, Inc.
| | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | | | (in thousands) | Net income attributable to Boston Properties, Inc. common shareholders | | $ | 451,939 |
| | $ | 502,285 |
| | $ | 572,606 |
| | $ | 433,111 |
| | $ | 741,754 |
| Add: | | | | | | | | | | | Preferred dividends | | 10,500 |
| | 10,500 |
| | 10,500 |
| | 10,500 |
| | 8,057 |
| Noncontrolling interest in discontinued operations—common units of the Operating Partnership | | — |
| | — |
| | — |
| | — |
| | 14,151 |
| Noncontrolling interest—common units of the Operating Partnership | | 52,210 |
| | 59,260 |
| | 66,951 |
| | 50,862 |
| | 70,085 |
| Noncontrolling interest—redeemable preferred units of the Operating Partnership | | — |
| | — |
| | 6 |
| | 1,023 |
| | 6,046 |
| Noncontrolling interest in property partnerships | | 47,832 |
| | (2,068 | ) | | 149,855 |
| | 30,561 |
| | 1,347 |
| Impairment loss from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 3,241 |
| Losses from interest rate contracts | | — |
| | 140 |
| | — |
| | — |
| | — |
| Interest expense | | 374,481 |
| | 412,849 |
| | 432,196 |
| | 455,743 |
| | 446,880 |
| Depreciation and amortization expense | | 617,547 |
| | 694,403 |
| | 639,542 |
| | 628,573 |
| | 560,637 |
| Impairment loss | | — |
| | 1,783 |
| | — |
| | — |
| | 8,306 |
| Transaction costs | | 668 |
| | 2,387 |
| | 1,259 |
| | 3,140 |
| | 1,744 |
| General and administrative expense | | 113,715 |
| | 105,229 |
| | 96,319 |
| | 98,937 |
| | 115,329 |
| Less: | | | | | | | | | | | Gain on forgiveness of debt from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 20,182 |
| Gains on sales of real estate from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 112,829 |
| Income from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 8,022 |
| Gains on sales of real estate | | 7,663 |
| | 80,606 |
| | 375,895 |
| | 168,039 |
| | — |
| Gains (losses) from early extinguishments of debt | | 496 |
| | (371 | ) | | (22,040 | ) | | (10,633 | ) | | 122 |
| Gains (losses) from investments in securities | | 3,678 |
| | 2,273 |
| | (653 | ) | | 1,038 |
| | 2,911 |
| Interest and other income | | 5,783 |
| | 7,230 |
| | 6,777 |
| | 8,765 |
| | 8,310 |
| Gains on consolidation of joint ventures | | — |
| | — |
| | — |
| | — |
| | 385,991 |
| Gain on sale of investment in unconsolidated joint venture | | — |
| | 59,370 |
| | — |
| | — |
| | — |
| Income from unconsolidated joint ventures | | 11,232 |
| | 8,074 |
| | 22,770 |
| | 12,769 |
| | 75,074 |
| Development and management services income | | 34,605 |
| | 28,284 |
| | 22,554 |
| | 25,316 |
| | 29,695 |
| Net Operating Income | | $ | 1,605,435 |
| | $ | 1,601,302 |
| | $ | 1,563,931 |
| | $ | 1,507,156 |
| | $ | 1,334,441 |
|
Boston Properties Limited Partnership
| | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | | | (in thousands) | Net income attributable to Boston Properties Limited Partnership common unitholders | | $ | 512,866 |
| | $ | 575,341 |
| | $ | 648,748 |
| | $ | 499,129 |
| | $ | 841,516 |
| Add: | | | | | | | | | | | Preferred dividends | | 10,500 |
| | 10,500 |
| | 10,500 |
| | 10,500 |
| | 8,057 |
| Noncontrolling interest—redeemable preferred units | | — |
| | — |
| | 6 |
| | 1,023 |
| | 6,046 |
| Noncontrolling interest in property partnerships | | 47,832 |
| | (2,068 | ) | | 149,855 |
| | 30,561 |
| | 1,347 |
| Impairment loss from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 2,852 |
| Losses from interest rate contracts | | — |
| | 140 |
| | — |
| | — |
| | — |
| Interest expense | | 374,481 |
| | 412,849 |
| | 432,196 |
| | 455,743 |
| | 446,880 |
| Depreciation and amortization expense | | 609,407 |
| | 682,776 |
| | 631,549 |
| | 620,064 |
| | 552,589 |
| Impairment loss | | — |
| | 1,783 |
| | — |
| | — |
| | 4,401 |
| Transaction costs | | 668 |
| | 2,387 |
| | 1,259 |
| | 3,140 |
| | 1,744 |
| General and administrative expense | | 113,715 |
| | 105,229 |
| | 96,319 |
| | 98,937 |
| | 115,329 |
| Less: | | | | | | | | | | | Gain on forgiveness of debt from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 20,736 |
| Gains on sales of real estate from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 115,459 |
| Income from discontinued operations | | — |
| | — |
| | — |
| | — |
| | 8,022 |
| Gains on sales of real estate | | 8,240 |
| | 82,775 |
| | 377,093 |
| | 174,686 |
| | — |
| Gains (losses) from early extinguishments of debt | | 496 |
| | (371 | ) | | (22,040 | ) | | (10,633 | ) | | 122 |
| Gains (losses) from investments in securities | | 3,678 |
| | 2,273 |
| | (653 | ) | | 1,038 |
| | 2,911 |
| Interest and other income | | 5,783 |
| | 7,230 |
| | 6,777 |
| | 8,765 |
| | 8,310 |
| Gains on consolidation of joint ventures | | — |
| | — |
| | — |
| | — |
| | 385,991 |
| Gain on sale of investment in unconsolidated joint venture | | — |
| | 59,370 |
| | — |
| | — |
| | — |
| Income from unconsolidated joint ventures | | 11,232 |
| | 8,074 |
| | 22,770 |
| | 12,769 |
| | 75,074 |
| Development and management services income | | 34,605 |
| | 28,284 |
| | 22,554 |
| | 25,316 |
| | 29,695 |
| Net Operating Income | | $ | 1,605,435 |
| | $ | 1,601,302 |
| | $ | 1,563,931 |
| | $ | 1,507,156 |
| | $ | 1,334,441 |
|
Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred dividends/distributions, net income attributable to noncontrolling interests, impairment loss losses from interest rate contracts, interest expense, depreciation and amortization, transaction costs and corporate general and administrative expense less (2) discontinued operations, gains on salesinvestment in unconsolidated joint venture consists of real estate, gains (losses) from early extinguishmentsan other-than-temporary decline in the fair value below the carrying value of debt, gains (losses) from investmentsour investment in securities, interest and other income, gains on consolidation ofthe Dock 72 unconsolidated joint ventures,venture (See Note 6 to the Consolidated Financial Statements).
(2)The gain on sale of investment in unconsolidated joint venture consists of the gain on sale of a 31% interest in Metropolitan Square. We continue to own a 20% interest in the joint venture. (3)Consists of the portion of income from unconsolidated joint ventures and development and management services revenue. We use NOI internally as a performance measure and believe it provides useful information to investors regarding our results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders. For
example, interest expense is not necessarily linkedrelated to the operating performancegain on sale of a real estate assetassociated with the sale of Annapolis Junction Building Eight and is often incurred attwo land parcels for the corporate level as opposedyear ended December 31, 2020, 540 Madison Avenue for the year ended December 31, 2019 and the gain on the distribution of Annapolis Junction Building One for the year ended December 31, 2018.
(4)Our calculation includes OP Units and vested LTIP Units (including vested 2012 OPP Units and vested 2013 - 2017 MYLTIP Units).
Reconciliation to the property level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, becauseDiluted Funds from Operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | 2020 | | 2019 | | 2018 | | 2017 | | 2016 | | | (in thousands) | | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | | Income (Numerator) | | Shares/Units (Denominator) | Basic Funds from Operations | | $ | 1,086,501 | | | 172,643 | | | $ | 1,209,601 | | | 172,200 | | | $ | 1,084,827 | | | 171,912 | | | $ | 1,068,119 | | | 171,661 | | | $ | 1,034,251 | | | 171,361 | | Effect of Dilutive Securities: | | | | | | | | | | | | | | | | | | | | | Stock based compensation | | — | | | 85 | | | — | | | 301 | | | — | | | 255 | | | — | | | 200 | | | — | | | 262 | | Diluted Funds from Operations | | $ | 1,086,501 | | | 172,728 | | | $ | 1,209,601 | | | 172,501 | | | $ | 1,084,827 | | | 172,167 | | | $ | 1,068,119 | | | 171,861 | | | $ | 1,034,251 | | | 171,623 | |
NOI presented by us may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently. We believe that, in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders as presented in our Consolidated Financial Statements. NOI should not be considered as a substitute for net income attributable to Boston Properties, Inc. common shareholders or net income attributable to Boston Properties Limited Partnership common unitholders (determined in accordance with GAAP) or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.
Contractual Obligations As of December 31, 2017,2020, we were subject to contractual payment obligations as described in the table below. | | | | Payments Due by Period | | | Payments Due by Period | | | Total | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | Thereafter | | | Total | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | Thereafter | | | (Dollars in thousands) | | | (in thousands) | Contractual Obligations: | | | | | | | | | | | | | | | Contractual Obligations: | | Long-term debt | | | | | | | | | | | | | | | Long-term debt | | Mortgage debt (1) | | $ | 3,899,513 |
| | $ | 132,161 |
| | $ | 132,157 |
| | $ | 132,153 |
| | $ | 149,599 |
| | $ | 703,301 |
| | $ | 2,650,142 |
| Mortgage debt (1) | | $ | 3,479,254 | | | $ | 125,811 | | | $ | 703,301 | | | $ | 78,890 | | | $ | 78,890 | | | $ | 78,890 | | | $ | 2,413,472 | | Unsecured senior notes (1) | | 8,821,456 |
| | 287,488 |
| | 987,488 |
| | 946,363 |
| | 1,039,456 |
| | 171,925 |
| | 5,388,736 |
| Unsecured senior notes (1) | | 11,603,243 | | | 1,174,281 | | | 306,750 | | | 1,773,969 | | | 932,675 | | | 1,049,943 | | | 6,365,625 | | Unsecured line of credit (1) (2) | | 49,552 |
| | 1,057 |
| | 1,057 |
| | 1,057 |
| | 1,057 |
| | 45,324 |
| | — |
| | Ground leases | | 650,284 |
| | 11,349 |
| | 16,360 |
| | 25,552 |
| | 11,814 |
| | 8,894 |
| | 576,315 |
| | Tenant obligations (3) (4) | | 374,103 |
| | 267,936 |
| | 59,890 |
| | 33,574 |
| | 9,289 |
| | 1,774 |
| | 1,640 |
| | Construction contracts on development projects (4) | | 1,688,312 |
| | 864,387 |
| | 605,152 |
| | 192,139 |
| | 25,872 |
| | 762 |
| | — |
| | Capital lease obligations (1) | | 51,596 |
| | (1,449 | ) | | (1,030 | ) | | (369 | ) | | (1,135 | ) | | (1,647 | ) | | 57,226 |
| | Unsecured line of credit / term loan (1) (2) | | Unsecured line of credit / term loan (1) (2) | | 507,188 | | | 5,500 | | | 501,688 | | | — | | | — | | | — | | | — | | Operating leases | | Operating leases | | 620,605 | | | 25,092 | | | 18,020 | | | 10,262 | | | 9,277 | | | 9,476 | | | 548,478 | | Tenant obligations (3) | | Tenant obligations (3) | | 587,789 | | | 450,885 | | | 97,372 | | | 34,286 | | | 4,264 | | | 739 | | | 243 | | Construction contracts on development projects | | Construction contracts on development projects | | 904,978 | | | 525,405 | | | 323,511 | | | 53,357 | | | 2,705 | | | — | | | — | | Finance leases (4) | | Finance leases (4) | | 1,457,469 | | | 5,896 | | | 10,206 | | | 9,701 | | | 48,518 | | | 9,971 | | | 1,373,177 | | Other obligations | | 1,698 |
| | 1,529 |
| | 81 |
| | 81 |
| | 7 |
| | — |
| | — |
| Other obligations | | 11,939 | | | 10,756 | | | 112 | | | 112 | | | 112 | | | 114 | | | 733 | | Total Contractual Obligations | | $ | 15,536,514 |
| | $ | 1,564,458 |
| | $ | 1,801,155 |
| | $ | 1,330,550 |
| | $ | 1,235,959 |
| | $ | 930,333 |
| | $ | 8,674,059 |
| Total Contractual Obligations | | $ | 19,172,465 | | | $ | 2,323,626 | | | $ | 1,960,960 | | | $ | 1,960,577 | | | $ | 1,076,441 | | | $ | 1,149,133 | | | $ | 10,701,728 | |
_______________ | | (1) | Amounts include principal and interest payments. |
| | (2) | Interest payments are calculated using the December 31, 2017 interest rate of 2.35%. |
| | (3) | Committed tenant-related obligations based on executed leases as of December 31, 2017 (tenant improvements and lease commissions). |
| | (4) | Includes 100% of the obligations for our consolidated entities and only our share for the unconsolidated joint ventures. |
(1)Amounts include principal and interest payments.
(2)Interest payments are calculated using the December 31, 2020 interest rate of 1.10%. (3)Committed tenant-related obligations based on executed leases as of December 31, 2020 (tenant improvements and lease commissions). (4)Finance lease payments in 2024 include approximately $38.7 million related to a purchase option that we are reasonably certain we will exercise. We have various service contracts with vendors related to our property management. In addition, we have certain other contracts we enter into in the ordinary course of business that may extend beyond one year. These contracts include terms that provide for cancellation with insignificant or no cancellation penalties. Contract terms are generally between three and five years. During 2017,2020, we paid approximately $309.8$314.2 million to fund tenant-related obligations, including tenant improvements and leasing commissions,commissions. In addition, we and our unconsolidated joint venture partners incurred approximately $323$248 million of new tenant-related obligations associated with approximately 4.03.7 million square feet of second generation leases, which included approximately 340,000 square feet of lease modifications related to COVID-19, or approximately $80$66 per square foot. In addition, we signed leases for approximately 2.4 million276,000 square feet at our development properties. The tenant-related obligations for the development properties are included within the projects’ “Estimated Total Investment” referred to in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources.” In the aggregate, during 2017,2020, we signed leases for approximately 6.44.0 million square feet of space, including approximately 340,000 square feet of lease modifications related to COVID-19, and incurred aggregate tenant-related obligations of approximately $698$293 million, or approximately $108$72 per square foot. Off-Balance Sheet Arrangements—Joint Venture Indebtedness We have investments in unconsolidated joint ventures with our effective ownership interests ranging from 20% to 60%. TenFourteen of these joint ventures have mortgage indebtedness. We exercise significant influence over, but do not control, these entities and therefore they are presently accountedentities. As a result, we account for them using the equity method of accounting. See also Note 56 to the Consolidated Financial Statements. At December 31, 2017,2020, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $1.4$2.6 billion (of which our proportionate share is approximately $604.8 million)$1.2 billion). The table below summarizes the outstanding debt of these joint venture properties at December 31, 2017. From time to time, we (or the applicable joint venture) have also agreed to guarantee portions of the principal, interest or other amounts in connection with other unconsolidated joint venture borrowings.2020. In addition to other guarantees specifically noted in the table, we have
agreed to customary construction completion guarantees for construction loans, environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) as well as the completion of development projects on certain of the loans. | | Properties | | Our Venture Ownership % | | Stated Interest Rate | | GAAP Interest Rate (1) | | Stated Principal Amount | | Deferred Financing Costs, Net | | Carrying amount | | Carrying amount (Our share) | | | | Maturity Date | Properties | | Venture Ownership % | | Stated Interest Rate | | GAAP Interest Rate (1) | | Stated Principal Amount | | | Deferred Financing Costs, Net | | Carrying Amount | | Carrying Amount (Our share) | | | | Maturity Date | | | (Dollars in thousands) | | | (dollars in thousands) | 540 Madison Avenue | | 60 | % | | 2.78 | % | | 2.95 | % | | $ | 120,000 |
| | $ | (85 | ) | | $ | 119,915 |
| | $ | 71,949 |
| | (2)(3) | | June 5, 2018 | | Santa Monica Business Park | | Santa Monica Business Park | | 55 | % | | 4.06 | % | | 4.24 | % | | $ | 300,000 | | | | $ | (2,394) | | | $ | 297,606 | | | $ | 163,683 | | | (2)(3) | | July 19, 2025 | Market Square North | | 50 | % | | 4.85 | % | | 4.91 | % | | 121,122 |
| | (231 | ) | | 120,891 |
| | 60,446 |
| | | | October 1, 2020 | Market Square North | | 50 | % | | 2.80 | % | | 2.96 | % | | 125,000 | | | | (1,003) | | | 123,997 | | | 61,999 | | | (4) | | November 10, 2025 | Annapolis Junction Building One | | 50 | % | | 7.03 | % | | 7.20 | % | | 39,549 |
| | (21 | ) | | 39,528 |
| | 19,763 |
| | (4) | | March 31, 2018 | | Annapolis Junction Building Six | | 50 | % | | 3.64 | % | | 3.81 | % | | 13,616 |
| | (31 | ) | | 13,585 |
| | 6,793 |
| | (5) | | November 17, 2018 | Annapolis Junction Building Six | | 50 | % | | 2.71 | % | | 3.12 | % | | 11,996 | | | | (51) | | | 11,945 | | | 5,972 | | | (5) | | November 16, 2021 | Annapolis Junction Building Seven and Eight | | 50 | % | | 3.63 | % | | 3.96 | % | | 36,097 |
| | (197 | ) | | 35,900 |
| | 17,950 |
| | (6) | | December 7, 2019 | | Annapolis Junction Building Seven | | Annapolis Junction Building Seven | | 50 | % | | 2.60 | % | | 2.95 | % | | 18,420 | | | | (15) | | | 18,405 | | | 9,203 | | | (6) | | March 25, 2021 | 1265 Main Street | | 50 | % | | 3.77 | % | | 3.83 | % | | 39,722 |
| | (389 | ) | | 39,333 |
| | 19,667 |
| | January 1, 2032 | 1265 Main Street | | 50 | % | | 3.77 | % | | 3.84 | % | | 37,334 | | | | (306) | | | 37,028 | | | 18,514 | | | January 1, 2032 | Colorado Center | | 50 | % | | 3.56 | % | | 3.58 | % | | 550,000 |
| | (989 | ) | | 549,011 |
| | 274,505 |
| | (2) | | August 9, 2027 | Colorado Center | | 50 | % | | 3.56 | % | | 3.58 | % | | 550,000 | | | | (679) | | | 549,321 | | | 274,660 | | | (2) | | August 9, 2027 | Dock 72 | | 50 | % | | 3.67 | % | | 3.96 | % | | 36,907 |
| | (10,224 | ) | | 26,683 |
| | 13,341 |
| | (2)(7) | | December 18, 2020 | Dock 72 | | 50 | % | | 2.63 | % | | 2.85 | % | | 196,412 | | | | (1,630) | | | 194,782 | | | 97,391 | | | (2)(7) | | December 18, 2023 | The Hub on Causeway - Podium | | 50 | % | | 3.81 | % | | 4.17 | % | | 863 |
| | — |
| | 863 |
| | 431 |
| | (2)(8) | | September 6, 2021 | The Hub on Causeway - Podium | | 50 | % | | 2.40 | % | | 2.89 | % | | 174,329 | | | | (687) | | | 173,642 | | | 86,821 | | | (2)(8) | | September 6, 2021 | 500 North Capitol Street | | 30 | % | | 4.15 | % | | 4.19 | % | | 105,000 |
| | (321 | ) | | 104,679 |
| | 31,404 |
| | (2) | | June 6, 2023 | | Hub50House | | Hub50House | | 50 | % | | 2.15 | % | | 2.43 | % | | 171,249 | | | | (680) | | | 170,569 | | | 85,284 | | | (2)(9) | | April 19, 2022 | 100 Causeway Street | | 100 Causeway Street | | 50 | % | | 1.65 | % | | 1.86 | % | | 216,575 | | | | (2,259) | | | 214,316 | | | 107,158 | | | (2)(10) | | September 5, 2023 | 7750 Wisconsin Avenue (Marriott International Headquarters) | | 7750 Wisconsin Avenue (Marriott International Headquarters) | | 50 | % | | 1.40 | % | | 1.94 | % | | 163,863 | | | | (3,249) | | | 160,614 | | | 80,307 | | | (2)(11) | | April 26, 2023 | 500 North Capitol Street, NW | | 500 North Capitol Street, NW | | 30 | % | | 4.15 | % | | 4.20 | % | | 105,000 | | | | (143) | | | 104,857 | | | 31,457 | | | (2) | | June 6, 2023 | 901 New York Avenue | | 25 | % | | 3.61 | % | | 3.68 | % | | 225,000 |
| | (1,251 | ) | | 223,749 |
| | 55,937 |
| | | | January 5, 2025 | 901 New York Avenue | | 25 | % | | 3.61 | % | | 3.69 | % | | 221,121 | | | | (715) | | | 220,406 | | | 55,102 | | | | | January 5, 2025 | 3 Hudson Boulevard | | 3 Hudson Boulevard | | 25 | % | | 3.64 | % | | 3.72 | % | | 80,000 | | | | (160) | | | 79,840 | | | 19,960 | | | (2)(12) | | July 13, 2023 | Metropolitan Square | | 20 | % | | 5.75 | % | | 5.81 | % | | 163,534 |
| | (231 | ) | | 163,303 |
| | 32,659 |
| | | | May 5, 2020 | Metropolitan Square | | 20 | % | | 5.40 | % | | 6.90 | % | | 288,000 | | | | (7,417) | | | 280,583 | | | 56,117 | | | (2)(13) | | July 7, 2022 | Total | | | | | | | | $ | 1,451,410 |
| | $ | (13,970 | ) | | $ | 1,437,440 |
| | $ | 604,845 |
| | | | Total | | $ | 2,659,299 | | | | $ | (21,388) | | | $ | 2,637,911 | | | $ | 1,153,628 | | | | |
_______________ | | (1) | (1)GAAP interest rate differs from the stated interest rate due to the inclusion of the amortization of financing charges, which includes mortgage recording fees. (2)The loan requires interest only payments with a balloon payment due at maturity. (3)The loan bears interest at a variable rate equal to LIBOR plus 1.28% per annum and matures on July 19, 2025. A subsidiary of the amortization of financing charges. |
| | (2) | The loan requires interest only payments with a balloon payment due at maturity. |
| | (3) | Mortgage loan bears interest at a variable rate equal to LIBOR plus 1.50% per annum. |
| | (4) | On April 11, 2016, a notice of event of default was received from the lender because the loan to value ratio was not in compliance with the applicable covenant in the loan agreement. On October 17, 2016, the lender notified the joint venture that it has elected to charge the default rate on the loan. The default rate is defined as LIBOR plus 5.75% per annum. Subsequently, the cash flows generated from the property have become insufficient to fund debt service payments and capital improvements necessary to lease and operate the property and the joint venture is not prepared to fund additional cash shortfalls at this time. Consequently, the |
joint venture is not current on making debt service payments and remainsentered into interest rate swap contracts with notional amounts aggregating $300.0 million through April 1, 2025, resulting in default. a fixed rate of approximately 4.063% per annum through the expiration of the interest rate swap contracts. (4)The loan hasbears interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.50%, plus (2) 2.30% per annum and matures on November 10, 2025, with one, three-yearone-year extension option, subject to certain conditions including that no eventconditions. (5)The loan bears interest at a variable rate equal to (1) the greater of default exists(x) LIBOR or is ongoing. | | (5) | The loan bears interest at a variable rate equal to LIBOR plus 2.25% per annum. |
| | (6) | The loan bears interest at a variable rate equal to LIBOR plus 2.35% per annum and matures on December 7, 2019, with three, one-year extension options, subject to certain conditions. |
| | (7) | The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on December 18, 2020 with two, one-year extension option, subject to certain conditions. |
| | (8) | The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on September 6, 2021, with two, one-year extension options, subject to certain conditions. In connection with the construction financing, we obtained the right to complete the construction of the garage underneath the project being developed by an affiliate of our joint venture partner and obtain funding from the garage construction lender. We agreed to guarantee completion of the garage to the construction lender and an affiliate of our partner agreed to reimburse us for our partner’s share of any payments under the guarantee. |
Environmental Matters(y) 0.50%, plus (2) 2.50% per annum and matures on November 16, 2021.
It is our policy(6)The loan bears interest at a variable rate equal to retain independent environmental consultantsLIBOR plus 2.35% per annum and matures on March 25, 2021.
(7)The construction financing has a borrowing capacity of $250.0 million. The construction financing bears interest at a variable rate equal to conduct(1) the greater of (x) LIBOR or update Phase I environmental assessments (which generally do not involve invasive techniques such(y) 0.25%, plus (2) 2.85% per annum and matures on December 18, 2023. (8)The construction financing had a borrowing capacity of $204.6 million. On September 16, 2019, the joint venture paid down the construction loan principal balance in the amount of approximately $28.8 million, reducing the borrowing capacity to $175.8 million. The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on September 6, 2021, with two, one-year extension options, subject to certain conditions. (9)The construction financing has a borrowing capacity of $180.0 million. The construction financing bears interest at a variable rate equal to LIBOR plus 2.00% per annum and matures on April 19, 2022, with two, one-year extension options, subject to certain conditions. (10)The construction financing has a borrowing capacity of $400.0 million. The construction financing bears interest at a variable rate equal to LIBOR plus 1.50% per annum (LIBOR plus 1.375% per annum upon
stabilization, as soil or ground water sampling)defined in the loan agreement) and asbestos surveys in connectionmatures on September 5, 2023, with our acquisitiontwo, one-year extension options, subject to certain conditions. (11)The construction financing has a borrowing capacity of properties. These pre-purchase environmental assessments have not revealed environmental conditions that we believe will have$255.0 million. The construction financing bears interest at a material adverse effectvariable rate equal to LIBOR plus 1.25% per annum and matures on April 26, 2023, with two, one-year extension options, subject to certain conditions. (12)We provided $80.0 million of mortgage financing to the joint venture. The loan bears interest at a variable rate equal to LIBOR plus 3.50% per annum and matures on July 13, 2023, with extension options, subject to certain conditions. The loan has been reflected as Related Party Note Receivable, Net on our business, assets,Consolidated Balance Sheets. (13)The loan bears interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.65%, plus (2) 4.75% per annum and matures on July 7, 2022 with two, one-year extension options, subject to certain conditions. The joint venture entered into an interest rate cap agreement with a financial condition, results of operations or liquidity, and we are not otherwise aware of environmental conditions with respectinstitution to our properties that we believe would have such a material adverse effect. However, from timelimit its exposure to time environmental conditions at our properties have required and mayincreases in the future require environmental testing and/or regulatory filings,LIBOR rate at a cap of 3.00% per annum on a notional amount of $325.0 million through July 7, 2022. Off-Balance Sheet Arrangements—Joint Venture Contractual Obligations As of December 31, 2020, we were subject to contractual payment obligations as well as remedial action. In February 1999, we (through a joint venture) acquired from Exxon Corporation a property in Massachusetts that was formerly used as a petroleum bulk storage and distribution facility and was known by the state regulatory authority to contain soil and groundwater contamination. We developed an office park on the property. We engaged a specially licensed environmental consultant to oversee the management of contaminated soil and groundwater that was disturbeddescribed in the coursetable below. The table represents our share of construction. Under the property acquisition agreement, Exxon agreedcontractual obligations.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payments Due by Period | | | Total | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | Thereafter | | | (in thousands) | Contractual Obligations: | | | | | | | | | | | | | | | Operating leases (1) | | $ | 97,051 | | | $ | 587 | | | $ | 838 | | | $ | 849 | | | $ | 861 | | | $ | 896 | | | $ | 93,020 | | Tenant obligations (2) | | 21,724 | | | 11,094 | | | 6,098 | | | — | | | — | | | — | | | 4,532 | | Construction contracts on development projects | | 181,357 | | | 100,678 | | | 43,164 | | | 1,421 | | | 36,094 | | | — | | | — | | Finance leases (3) | | 270,366 | | | 9,945 | | | 9,945 | | | 10,894 | | | 10,980 | | | 10,980 | | | 217,622 | | Total Contractual Obligations | | $ | 570,498 | | | $ | 122,304 | | | $ | 60,045 | | | $ | 13,164 | | | $ | 47,935 | | | $ | 11,876 | | | $ | 315,174 | |
_______________ (1)Operating leases include approximately $61.7 million related to (1) bear the liability arising from releases or discharges of oil and hazardous substances which occurred at the site prior to our ownership, (2) continue monitoring and/or remediating such releases and discharges as necessary and appropriate to comply with applicable requirements, and (3) indemnify us for certain losses arising from preexisting site conditions. Any indemnity claim may be subject to various defenses, and there can be no assurancerenewal options that the amounts paid under the indemnity, if any, would be sufficientjoint venture is reasonably certain it will exercise. (2)Committed tenant-related obligations based on executed leases as of December 31, 2020 (tenant improvements and lease commissions). (3)Finance leases include approximately $194.7 million related to cover the liabilities arising from any such releases and discharges. Environmental investigations at some of our properties and certain properties owned by our affiliates have identified groundwater contamination migrating from off-site source properties. In each case we engaged a licensed environmental consultant to perform the necessary investigations and assessments, and to prepare any required submittals to the regulatory authorities. In each case the environmental consultant concludedpurchase option that the properties qualify under the regulatory program or the regulatory practice for a status which eliminatesjoint venture is reasonably certain deadlines for conducting response actions at a site. We also believe that these properties qualify for liability relief under certain statutory provisions or regulatory practices regarding upgradient releases. Although we believe that the current or former owners of the upgradient source properties may bear responsibility for some or all of the costs of addressing the identified groundwater contamination, weit will take such further response actions (if any) that we deem necessary or advisable. Other than periodic testing at some of these properties, no such additional response actions are anticipated at this time.
Some of our properties and certain properties owned by our affiliates are locatedexercise in urban, industrial and other previously developed areas where fill or current or historical use of the areas have caused site contamination. Accordingly, it is sometimes necessary to institute special soil and/or groundwater handling procedures and/or include particular building design features in connection with development, construction and other property operations in order to achieve regulatory closure and/or ensure that contaminated materials are addressed in an appropriate manner. In these situations, it is our practice to investigate the nature and extent of detected contamination, including potential issues associated with contaminant migration, assess potential liability risks and estimate the costs of required response actions and special handling procedures. We then use this information as part of our decision-making process with respect to the acquisition, deal structure and/or development of the property. For example, we own a parcel in Massachusetts which was formerly used as a quarry/asphalt batching facility. Pre-purchase testing indicated that the site contained relatively low levels of certain contaminants. We have developed an office park on this property. Prior to and during redevelopment activities, we engaged a specially2028.
licensed environmental consultant to monitor environmental conditions at the site and prepare necessary regulatory submittals based on the results of an environmental risk characterization. A submittal has been made to the regulatory authorities in order to achieve regulatory closure at this site. The submittal included an environmental deed restriction that mandates compliance with certain protective measures in a portion of the site where low levels of residual soil contamination have been left in place in accordance with applicable laws.
We expect that resolution of the environmental matters described above will not have a material impact on our business, assets, financial condition, results of operations or liquidity. However, we cannot assure you that we have identified all environmental liabilities at our properties, that all necessary remediation actions have been or will be undertaken at our properties, that we will be indemnified, in full or at all, or that we will have insurance coverage in the event that such environmental liabilities arise.
New Accounting Pronouncements For a discussion of the new accounting pronouncements that may have an effect on our Consolidated Financial Statements(See Note 2 to the Consolidated Financial Statements). Inflation Substantially allMost of our leases provide for separate real estate tax and operating expense escalations over a base amount. In addition, many of our leases provide for fixed base rent increases or indexed increases. We believe that inflationary increases in costs may be at least partially offset by the contractual rent increases and operating expense escalations.
Item 7A—Quantitative and Qualitative Disclosures about Market Risk. The following table presents the aggregate carrying value of our mortgage notes payable, net, unsecured senior notes, net, and unsecured line of credit, unsecured term loan, net and our corresponding estimate of fair value as of December 31, 2017. Approximately $10.22020. As of December 31, 2020, approximately $12.5 billion of these borrowings bore interest at fixed rates and therefore the fair value of these instruments is affected by changes in the market interest rates. As of December 31, 2017,2020, the weighted-average interest rate on our variable rate debt was LIBOR plus 0.875% (2.35%0.95% (1.10%) per annum. The following table presents our aggregate fixed rate debt obligations with corresponding weighted-average interest rates sorted by maturity date and our aggregate variable rate debt obligations sorted by maturity date. The table below does not include our unconsolidated joint venture debt. For a discussion concerning our unconsolidated joint venture debt, see Note 56 to the Consolidated Financial Statements and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capitalization—Off-Balance Sheet Arrangements—Joint Venture Indebtedness.” | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | 2026+ | | Total | | Estimated Fair Value | | (dollars in thousands) Mortgage debt, net | Fixed Rate | $ | 13,440 | | | $ | 611,132 | | | $ | (3,494) | | | $ | (3,494) | | | $ | (3,494) | | | $ | 2,294,991 | | | $ | 2,909,081 | | | $ | 3,144,150 | | GAAP Average Interest Rate | 4.99 | % | | 4.79 | % | | — | % | | — | % | | — | % | | 3.64 | % | | 3.89 | % | | | Variable Rate | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Unsecured debt, net | Fixed Rate | $ | 839,355 | | | $ | (10,189) | | | $ | 1,490,888 | | | $ | 692,161 | | | $ | 843,439 | | | $ | 5,783,633 | | | $ | 9,639,287 | | | $ | 10,620,527 | | GAAP Average Interest Rate | 4.29 | % | | — | % | | 3.73 | % | | 3.92 | % | | 3.35 | % | | 3.64 | % | | 3.71 | % | | | Variable Rate | (460) | | | 499,850 | | | — | | | — | | | — | | | — | | | 499,390 | | | 500,326 | | Total Debt | $ | 852,335 | | | $ | 1,100,793 | | | $ | 1,487,394 | | | $ | 688,667 | | | $ | 839,945 | | | $ | 8,078,624 | | | $ | 13,047,758 | | | $ | 14,265,003 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023+ | | Total | | Estimated Fair Value | | (Dollars in thousands) Mortgage debt | Fixed Rate | $ | 14,708 |
| | $ | 15,745 |
| | $ | 16,841 |
| | $ | 36,346 |
| | $ | 611,132 |
| | $ | 2,284,509 |
| | $ | 2,979,281 |
| | $ | 3,042,920 |
| GAAP Average Interest Rate | 5.52 | % | | 5.53 | % | | 5.55 | % | | 6.61 | % | | 4.79 | % | | 3.64 | % | | 3.95 | % | | | Variable Rate | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | Unsecured debt | Fixed Rate | $ | (8,800 | ) | | $ | 691,255 |
| | $ | 691,748 |
| | $ | 843,065 |
| | $ | (6,454 | ) | | $ | 5,036,516 |
| | $ | 7,247,330 |
| | $ | 7,461,615 |
| GAAP Average Interest Rate | — |
| | 5.97 | % | | 5.71 | % | | 4.29 | % | | — |
| | 3.65 | % | | 4.15 | % | | | Variable Rate | — |
| | — |
| | — |
| | — |
| | 45,000 |
| | — |
| | 45,000 |
| | 45,000 |
| Total Debt | $ | 5,908 |
| | $ | 707,000 |
| | $ | 708,589 |
| | $ | 879,411 |
| | $ | 649,678 |
| | $ | 7,321,025 |
| | $ | 10,271,611 |
| | $ | 10,549,535 |
|
On February 14, 2021, BPLP completed the redemption of $850.0 million in aggregate principal amount of its 4.125% senior notes due May 15, 2021. The redemption price was approximately $858.7 million, which was equal to par plus approximately $8.7 million of accrued and unpaid interest to, but not including, the redemption date.
At December 31, 2017,2020, the weighted-average coupon/stated rates on the fixed rate debt stated above was 3.98%3.65% per annum. At December 31, 2017,2020, our outstanding variable rate debt based on LIBOR totaled approximately $45.0$500.0 million. At December 31, 2017,2020, the coupon/stated rate on our variable rate debt was approximately 2.35%.1.10% per annum. If market interest rates on our variable rate debt had been 100 basis points greater, total interest expense would have increased approximately $450,000$5.0 million for the year ended December 31, 2017.2020.
The fair value amounts were determined solely by considering the impact of hypothetical interest rates on our financial instruments. Due to the uncertainty of specific actions we may undertake to minimize possible effects of market interest rate increases, this analysis assumes no changes in our financial structure. Due to the uncertainty of specific actions we may undertake to minimize possible effects of market interest rate increases, this analysis assumes no changes in our financial structure. In the event that LIBOR is discontinued, the interest rate for our variable rate debt and our unconsolidated joint ventures’ variable rate debt and the swap rate for our unconsolidated joint ventures’ interest rate swaps following such event will be based on an alternative variable rate as specified in the applicable documentation governing such debt or swaps or as otherwise agreed upon. Such an event would not affect our ability to borrow or maintain already outstanding borrowings or our unconsolidated joint ventures’ ability to maintain its outstanding swaps, but the alternative variable rate could be higher and more volatile than LIBOR prior to its discontinuance. We understand that LIBOR is expected to remain available through the end of 2021, but may be discontinued or otherwise become unavailable thereafter.
Additional disclosure about market risk is incorporated herein by reference from “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Market Risk.”
Item 8. Financial Statements and Supplementary DataData.
BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | | | Page | | | Page | | | | Boston Properties, Inc. | | | | | | | | | | | | | | | | | | | | | | | | | | Boston Properties Limited Partnership | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston Properties, Inc. | | | | | | | | Boston Properties Limited Partnership | | | | |
All other schedules for which a provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable, and therefore have been omitted.
Management’s Report on Internal Control over Financial Reporting Management of Boston Properties, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for Boston Properties, Inc. Boston Properties, Inc.’s internal control over financial reporting is a process designed under the supervision of its principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Boston Properties, Inc.’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. As of the end of Boston Properties, Inc.’s 20172020 fiscal year, management conducted assessments of the effectiveness of Boston Properties, Inc.’s internal control over financial reporting based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on these assessments, management has determined that Boston Properties, Inc.’s internal control over financial reporting as of December 31, 20172020 was effective. Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of Boston Properties, Inc.; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Boston Properties, Inc.’s assets that could have a material effect on its financial statements. The effectiveness of Boston Properties, Inc.’s internal control over financial reporting as of December 31, 20172020 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report appearing on page 113, which expresses an unqualified opinion on the effectiveness of Boston Properties, Inc.’s internal control over financial reporting as of December 31, 2017.2020.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and ShareholdersStockholders of Boston Properties, Inc.:
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Boston Properties, Inc. and its subsidiaries (the “Company”) as of December 31, 20172020 and December 31, 2016,2019, and the related consolidated statements of operations, of comprehensive income, stockholders’of equity and of cash flows for each of the three years in the period ended December 31, 2017,2020, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2017,2020, based on criteria established in Internal Control - Integrated Framework(2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172020 and December 31, 2016,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20172020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2020, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management'sManagement’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impairment Assessments of Long-Lived Assets and Investments in Unconsolidated Joint Ventures As described in Notes 2, 3 and 6 to the consolidated financial statements, the Company’s total real estate balance was $17,818.8 million and its investments in unconsolidated joint ventures was $1,273.9 million as of December 31, 2020. During 2020, the Company did not recognize an impairment loss related to its long-lived assets and recognized a $60.5 million other-than-temporary-impairment loss related to an investment in unconsolidated joint venture. Management reviews its long-lived assets for indicators of impairment following the end of each quarter and when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. This evaluation of long-lived assets is dependent on a number of factors, including when there is an event or adverse change in the operating performance of the long-lived asset or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life or hold period. Management reviews its unconsolidated joint ventures for indicators of impairment on a quarterly basis and records impairment charges when events or circumstances change indicating that a decline in the fair values below the carrying amounts has occurred and such decline is other-than-temporary. This evaluation of the investments in unconsolidated joint ventures is dependent on a number of factors, including the performance of each investment and market conditions. The Company will record an impairment charge if it determines that a decline in the fair value below the carrying amount of an investment in an unconsolidated joint venture is other-than-temporary. The fair value is calculated using discounted cash flows which is subjective and considers assumptions regarding future occupancy, future rental rates, future capital requirements, discount rates and capitalization rates. The principal considerations for our determination that performing procedures relating to the impairment assessments of long-lived assets and investments in unconsolidated joint ventures is a critical audit matter are (i) the significant judgment by management in identifying the indicators of impairment for long lived assets, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating evidence related to identifying the indicators of impairment for long-lived assets; (ii) the significant judgment by management in identifying the indicators of impairment for investments in unconsolidated joint ventures, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating evidence related to the indicators of impairment for investments in unconsolidated joint ventures; (iii) the significant judgment by management when developing the fair value measurement of the investments in unconsolidated joint ventures relating to potential other-than-temporary impairments, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s assumptions related to future occupancy, future rental rates, future capital requirements, discount rate and capitalization rate; and, (iv) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to (i) the identification of the indicators of impairment for long-lived assets, (ii) the identification of the indicators of impairment for investments in unconsolidated joint ventures, and (iii) developing the fair value measurement of the investments in unconsolidated joint ventures in the evaluation of potential other-than-temporary impairments. For the long-lived assets, the procedures included, among others, evaluating the reasonableness of management’s assessment of the indicators of impairment for long lived assets by considering the anticipated hold period, market economic conditions, operating performance of the asset, or evidence obtained in other areas of the audit that may be indicative of an indicator of impairment of the long-lived assets. For the investments in unconsolidated joint ventures, the procedures, included, among others, (i) evaluating the reasonableness of
management’s identification of changes in the performance of each investment and market conditions indicating that there may be a decline in the fair values of the investments in unconsolidated joint ventures below the carrying amounts has occurred and such decline is other-than-temporary by considering changes in the performance of the investments and market conditions, or evidence obtained in other areas of the audit and (ii) evaluating the reasonableness of aforementioned assumptions, by consideration of the past performance of the investment in unconsolidated joint ventures and whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation the appropriateness of the discounted cash flow model and reasonableness of the assumptions.
/s/ PricewaterhouseCoopers LLP Boston, Massachusetts
Boston, MAFebruary 26, 2021
February 28, 2018
We have served as the Company’s auditor since 1997.
115 BOSTON PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and par value amounts) | | | | | | | | | | December 31, 2017 | | December 31, 2016 | ASSETS | | | | Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $7,172,718 and $6,760,078 at December 31, 2017 and 2016, respectively ) | $ | 21,096,642 |
| | $ | 20,147,263 |
| Less: accumulated depreciation (amounts related to VIEs of $(854,172) and $(758,640) at December 31, 2017 and 2016, respectively | (4,589,634 | ) | | (4,222,235 | ) | Total real estate | 16,507,008 |
| | 15,925,028 |
| Cash and cash equivalents (amounts related to VIEs of $304,955 and $253,999 at December 31, 2017 and 2016, respectively) | 434,767 |
| | 356,914 |
| Cash held in escrows (amounts related to VIEs of $6,135 and $4,955 at December 31, 2017 and 2016, respectively) | 70,602 |
| | 63,174 |
| Investments in securities | 29,161 |
| | 23,814 |
| Tenant and other receivables, net (amounts related to VIEs of $27,057 and $23,525 at December 31, 2017 and 2016, respectively) | 92,186 |
| | 92,548 |
| Accrued rental income, net (amounts related to VIEs of $242,589 and $224,185 at December 31, 2017 and 2016, respectively) | 861,575 |
| | 799,138 |
| Deferred charges, net (amounts related to VIEs of $281,678 and $290,436 at December 31, 2017 and 2016, respectively) | 679,038 |
| | 686,163 |
| Prepaid expenses and other assets (amounts related to VIEs of $33,666 and $42,718 at December 31, 2017 and 2016, respectively) | 77,971 |
| | 129,666 |
| Investments in unconsolidated joint ventures | 619,925 |
| | 775,198 |
| Total assets | $ | 19,372,233 |
| | $ | 18,851,643 |
| LIABILITIES AND EQUITY | | | | Liabilities: | | | | Mortgage notes payable, net (amounts related to VIEs of $2,939,183 and $2,018,483 at December 31, 2017 and 2016, respectively) | $ | 2,979,281 |
| | $ | 2,063,087 |
| Unsecured senior notes, net | 7,247,330 |
| | 7,245,953 |
| Unsecured line of credit | 45,000 |
| | — |
| Unsecured term loan | — |
| | — |
| Mezzanine notes payable (amounts related to VIEs of $0 and $307,093 at December 31, 2017 and 2016, respectively) | — |
| | 307,093 |
| Outside members’ notes payable (amounts related to VIEs of $0 and $180,000 at December 31, 2017 and 2016, respectively) | — |
| | 180,000 |
| Accounts payable and accrued expenses (amounts related to VIEs of $106,683 and $110,457 at December 31, 2017 and 2016, respectively) | 331,500 |
| | 298,524 |
| Dividends and distributions payable | 139,040 |
| | 130,308 |
| Accrued interest payable (amounts related to VIEs of $6,907 and $162,226 at December 31, 2017 and 2016, respectively) | 83,646 |
| | 243,933 |
| Other liabilities (amounts related to VIEs of $164,806 and $175,146 at December 31, 2017 and 2016, respectively) | 443,980 |
| | 450,821 |
| Total liabilities | 11,269,777 |
| | 10,919,719 |
| Commitments and contingencies | — |
| | — |
| Equity: | | | | Stockholders’ equity attributable to Boston Properties, Inc.: | | | | Excess stock, $0.01 par value, 150,000,000 shares authorized, none issued or outstanding | — |
| | — |
| Preferred stock, $0.01 par value, 50,000,000 shares authorized; | | | | 5.25% Series B cumulative redeemable preferred stock, $0.01 par value, liquidation preference $2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at December 31, 2017 and December 31, 2016 | 200,000 |
| | 200,000 |
| Common stock, $0.01 par value, 250,000,000 shares authorized,154,404,186 and 153,869,075 issued and 154,325,286 and 153,790,175 outstanding at December 31, 2017 and December 31, 2016, respectively | 1,543 |
| | 1,538 |
| Additional paid-in capital | 6,377,908 |
| | 6,333,424 |
| Dividends in excess of earnings | (712,343 | ) | | (693,694 | ) | Treasury common stock at cost, 78,900 shares at December 31, 2017 and December 31, 2016 | (2,722 | ) | | (2,722 | ) | Accumulated other comprehensive loss | (50,429 | ) | | (52,251 | ) | Total stockholders’ equity attributable to Boston Properties, Inc. | 5,813,957 |
| | 5,786,295 |
| Noncontrolling interests: | | | | Common units of the Operating Partnership | 604,739 |
| | 614,982 |
| Property partnerships | 1,683,760 |
| | 1,530,647 |
| Total equity | 8,102,456 |
| | 7,931,924 |
| Total liabilities and equity | $ | 19,372,233 |
| | $ | 18,851,643 |
|
| | | | | | | | | | | | | | | BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except for share and par value amounts) | | | December 31, 2020 | | December 31, 2019 | ASSETS | | | | | Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,592,019 and $6,497,031 at December 31, 2020 and December 31, 2019, respectively) | | $ | 22,969,110 | | | $ | 22,502,976 | | Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at December 31, 2020 and December 31, 2019, respectively) | | 237,393 | | | 237,394 | | Right of use assets - operating leases | | 146,406 | | | 148,640 | | Less: accumulated depreciation (amounts related to VIEs of $(1,158,548) and $(1,058,495) at December 31, 2020 and December 31, 2019, respectively) | | (5,534,102) | | | (5,266,798) | | Total real estate | | 17,818,807 | | | 17,622,212 | | Cash and cash equivalents (amounts related to VIEs of $340,642 and $280,033 at December 31, 2020 and December 31, 2019, respectively) | | 1,668,742 | | | 644,950 | | Cash held in escrows | | 50,587 | | | 46,936 | | Investments in securities | | 39,457 | | | 36,747 | | Tenant and other receivables, net (amounts related to VIEs of $10,911 and $28,918 at December 31, 2020 and December 31, 2019, respectively) | | 77,411 | | | 112,807 | | Related party note receivable, net | | 77,552 | | | 80,000 | | Notes receivable, net | | 18,729 | | | 15,920 | | Accrued rental income, net (amounts related to VIEs of $336,594 and $298,318 at December 31, 2020 and December 31, 2019, respectively) | | 1,122,502 | | | 1,038,788 | | Deferred charges, net (amounts related to VIEs of $183,306 and $214,769 at December 31, 2020 and December 31, 2019, respectively) | | 640,085 | | | 689,213 | | Prepaid expenses and other assets (amounts related to VIEs of $13,137 and $20,931 at December 31, 2020 and December 31, 2019, respectively) | | 33,840 | | | 41,685 | | Investments in unconsolidated joint ventures | | 1,310,478 | | | 955,647 | | Total assets | | $ | 22,858,190 | | | $ | 21,284,905 | | LIABILITIES AND EQUITY | | | | | Liabilities: | | | | | Mortgage notes payable, net (amounts related to VIEs of $2,907,590 and $2,918,806 at December 31, 2020 and December 31, 2019, respectively) | | $ | 2,909,081 | | | $ | 2,922,408 | | Unsecured senior notes, net | | 9,639,287 | | | 8,390,459 | | Unsecured line of credit | | 0 | | | 0 | | Unsecured term loan, net | | 499,390 | | | 498,939 | | Lease liabilities - finance leases (amounts related to VIEs of $20,306 and $20,189 at December 31, 2020 and December 31, 2019, respectively) | | 236,492 | | | 224,042 | | Lease liabilities - operating leases | | 201,713 | | | 200,180 | | Accounts payable and accrued expenses (amounts related to VIEs of $23,128 and $45,777 at December 31, 2020 and December 31, 2019, respectively) | | 336,264 | | | 377,553 | | Dividends and distributions payable | | 171,082 | | | 170,713 | | Accrued interest payable | | 106,288 | | | 90,016 | | Other liabilities (amounts related to VIEs of $158,805 and $140,110 at December 31, 2020 and December 31, 2019, respectively) | | 412,084 | | | 387,994 | | Total liabilities | | 14,511,681 | | | 13,262,304 | | Commitments and contingencies (See Note 10) | | | | | Redeemable deferred stock units— 72,966 and 60,676 units outstanding at redemption value at December 31, 2020 and December 31, 2019, respectively | | 6,897 | | | 8,365 | |
| | | | | | | | | | | | | | | BOSTON PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except for share and par value amounts) | | | December 31, 2020 | | December 31, 2019 | Equity: | | | | | Stockholders’ equity attributable to Boston Properties, Inc.: | | | | | Excess stock, $0.01 par value, 150,000,000 shares authorized, NaN issued or outstanding | | 0 | | | 0 | | Preferred stock, $0.01 par value, 50,000,000 shares authorized; | | | | | 5.25% Series B cumulative redeemable preferred stock, $0.01 par value, liquidation preference $2,500 per share, 92,000 shares authorized, 80,000 shares issued and outstanding at December 31, 2020 and December 31, 2019 | | 200,000 | | | 200,000 | | Common stock, $0.01 par value, 250,000,000 shares authorized, 155,797,725 and 154,869,198 issued and 155,718,825 and 154,790,298 outstanding at December 31, 2020 and December 31, 2019, respectively | | 1,557 | | | 1,548 | | Additional paid-in capital | | 6,356,791 | | | 6,294,719 | | Dividends in excess of earnings | | (509,653) | | | (760,523) | | Treasury common stock at cost, 78,900 shares at December 31, 2020 and December 31, 2019 | | (2,722) | | | (2,722) | | Accumulated other comprehensive loss | | (49,890) | | | (48,335) | | Total stockholders’ equity attributable to Boston Properties, Inc. | | 5,996,083 | | | 5,684,687 | | Noncontrolling interests: | | | | | Common units of Boston Properties Limited Partnership | | 616,596 | | | 600,860 | | Property partnerships | | 1,726,933 | | | 1,728,689 | | Total equity | | 8,339,612 | | | 8,014,236 | | Total liabilities and equity | | $ | 22,858,190 | | | $ | 21,284,905 | |
The accompanying notes are an integral part of these consolidated financial statements.
BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per share amounts) | | | For the year ended December 31, | | | | | | | | | | | | | | | | | | | | | 2017 | | 2016 | | 2015 | | | | Year ended December 31, | | (in thousands, except for per share amounts) | | | | 2020 | | 2019 | | 2018 | Revenue | | | | | | Revenue | | | | | | | | Rental | | | | | | | Lease | | Lease | | | $ | 2,646,261 | | | $ | 2,758,014 | | | $ | — | | Base rent | $ | 2,049,368 |
| | $ | 2,017,767 |
| | $ | 1,964,732 |
| Base rent | | | — | | | — | | | 2,103,723 | | Recoveries from tenants | 367,500 |
| | 358,975 |
| | 355,508 |
| Recoveries from tenants | | | — | | | — | | | 402,066 | | Parking and other | 105,000 |
| | 100,910 |
| | 101,981 |
| Parking and other | | | 70,680 | | | 103,534 | | | 107,421 | | Total rental revenue | 2,521,868 |
| | 2,477,652 |
| | 2,422,221 |
| | Hotel revenue | 45,603 |
| | 44,884 |
| | 46,046 |
| | Hotel | | Hotel | | | 7,478 | | | 48,589 | | | 49,118 | | Development and management services | 34,605 |
| | 28,284 |
| | 22,554 |
| Development and management services | | | 29,641 | | | 40,039 | | | 45,158 | | Direct reimbursements of payroll and related costs from management services contracts | | Direct reimbursements of payroll and related costs from management services contracts | | | 11,626 | | | 10,386 | | | 9,590 | | Total revenue | 2,602,076 |
| | 2,550,820 |
| | 2,490,821 |
| Total revenue | | | 2,765,686 | | | 2,960,562 | | | 2,717,076 | | Expenses | | | | | | Expenses | | | | | | | | Operating | | | | | | Operating | | | Rental | 929,977 |
| | 889,768 |
| | 872,252 |
| Rental | | | 1,017,208 | | | 1,050,010 | | | 979,151 | | Hotel | 32,059 |
| | 31,466 |
| | 32,084 |
| Hotel | | | 13,136 | | | 34,004 | | | 33,863 | | General and administrative | 113,715 |
| | 105,229 |
| | 96,319 |
| General and administrative | | | 133,112 | | | 140,777 | | | 121,722 | | Payroll and related costs from management services contracts | | Payroll and related costs from management services contracts | | | 11,626 | | | 10,386 | | | 9,590 | | Transaction costs | 668 |
| | 2,387 |
| | 1,259 |
| Transaction costs | | | 1,531 | | | 1,984 | | | 1,604 | | Impairment loss | — |
| | 1,783 |
| | — |
| | Depreciation and amortization | 617,547 |
| | 694,403 |
| | 639,542 |
| Depreciation and amortization | | | 683,751 | | | 677,764 | | | 645,649 | | Total expenses | 1,693,966 |
| | 1,725,036 |
| | 1,641,456 |
| Total expenses | | | 1,860,364 | | | 1,914,925 | | | 1,791,579 | | Operating income | 908,110 |
| | 825,784 |
| | 849,365 |
| | Other income (expense) | | | | | | Other income (expense) | | | | | | | | Income from unconsolidated joint ventures | 11,232 |
| | 8,074 |
| | 22,770 |
| | Gain on sale of investment in unconsolidated joint venture | — |
| | 59,370 |
| | — |
| | Interest and other income | 5,783 |
| | 7,230 |
| | 6,777 |
| | Income (loss) from unconsolidated joint ventures | | Income (loss) from unconsolidated joint ventures | | | (85,110) | | | 46,592 | | | 2,222 | | Gains on sales of real estate | | Gains on sales of real estate | | | 618,982 | | | 709 | | | 182,356 | | Interest and other income (loss) | | Interest and other income (loss) | | | 5,953 | | | 18,939 | | | 10,823 | | Gains (losses) from investments in securities | 3,678 |
| | 2,273 |
| | (653 | ) | Gains (losses) from investments in securities | | | 5,261 | | | 6,417 | | | (1,865) | | Impairment loss | | Impairment loss | | | 0 | | | (24,038) | | | (11,812) | | Loss from early extinguishment of debt | | Loss from early extinguishment of debt | | | 0 | | | (29,540) | | | (16,490) | | Interest expense | (374,481 | ) | | (412,849 | ) | | (432,196 | ) | Interest expense | | | (431,717) | | | (412,717) | | | (378,168) | | Gains (losses) from early extinguishments of debt | 496 |
| | (371 | ) | | (22,040 | ) | | Losses from interest rate contracts | — |
| | (140 | ) | | — |
| | Income before gains on sales of real estate | 554,818 |
| | 489,371 |
| | 424,023 |
| | Gains on sales of real estate | 7,663 |
| | 80,606 |
| | 375,895 |
| | Net income | 562,481 |
| | 569,977 |
|
| 799,918 |
| Net income | | | 1,018,691 | | | 651,999 | | | 712,563 | | Net income attributable to noncontrolling interests | | | | | | Net income attributable to noncontrolling interests | | | Noncontrolling interests in property partnerships | (47,832 | ) | | 2,068 |
| | (149,855 | ) | Noncontrolling interests in property partnerships | | | (48,260) | | | (71,120) | | | (62,909) | | Noncontrolling interest—redeemable preferred units of the Operating Partnership | — |
| | — |
| | (6 | ) | | Noncontrolling interest—common units of the Operating Partnership | (52,210 | ) | | (59,260 | ) | | (66,951 | ) | Noncontrolling interest—common units of the Operating Partnership | | | (97,704) | | | (59,345) | | | (66,807) | | Net income attributable to Boston Properties, Inc. | 462,439 |
| | 512,785 |
| | 583,106 |
| Net income attributable to Boston Properties, Inc. | | | 872,727 | | | 521,534 | | | 582,847 | | Preferred dividends | (10,500 | ) | | (10,500 | ) | | (10,500 | ) | Preferred dividends | | | (10,500) | | | (10,500) | | | (10,500) | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 451,939 |
| | $ | 502,285 |
| | $ | 572,606 |
| Net income attributable to Boston Properties, Inc. common shareholders | | | $ | 862,227 | | | $ | 511,034 | | | $ | 572,347 | | Basic earnings per common share attributable to Boston Properties, Inc. common shareholders: | | | | | | Basic earnings per common share attributable to Boston Properties, Inc. common shareholders: | | | | | | | | Net income | $ | 2.93 |
| | $ | 3.27 |
| | $ | 3.73 |
| Net income | | | $ | 5.54 | | | $ | 3.31 | | | $ | 3.71 | | Weighted average number of common shares outstanding | 154,190 |
| | 153,715 |
| | 153,471 |
| Weighted average number of common shares outstanding | | | 155,432 | | | 154,582 | | | 154,427 | | Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders: | | | | | | Diluted earnings per common share attributable to Boston Properties, Inc. common shareholders: | | | | | | | | Net income | $ | 2.93 |
| | $ | 3.26 |
| | $ | 3.72 |
| Net income | | | $ | 5.54 | | | $ | 3.30 | | | $ | 3.70 | | Weighted average number of common and common equivalent shares outstanding | 154,390 |
| | 153,977 |
| | 153,844 |
| Weighted average number of common and common equivalent shares outstanding | | | 155,517 | | | 154,883 | | | 154,682 | | | | | | | | | Dividends per common share | $ | 3.05 |
| | $ | 2.70 |
| | $ | 3.85 |
| |
The accompanying notes are an integral part of these consolidated financial statements.
BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) | | | | For the year ended December 31, | | | | | | | | | | | | | | | | | | | | | 2017 | | 2016 | | 2015 | | | Year ended December 31, | | | (in thousands) | | | | 2020 | | 2019 | | 2018 | Net income | | $ | 562,481 |
| | $ | 569,977 |
| | $ | 799,918 |
| Net income | | | $ | 1,018,691 | | | $ | 651,999 | | | $ | 712,563 | | Other comprehensive loss: | | | | | | | | Other comprehensive income (loss): | | Other comprehensive income (loss): | | | | Effective portion of interest rate contracts | | (6,133 | ) | | (47,144 | ) | | (10,302 | ) | Effective portion of interest rate contracts | | | (7,848) | | | (6,751) | | | (3,096) | | Amortization of interest rate contracts (1) | | 6,033 |
| | 3,751 |
| | 2,510 |
| Amortization of interest rate contracts (1) | | | 6,697 | | | 6,664 | | | 6,664 | | Other comprehensive loss | | (100 | ) | | (43,393 | ) | | (7,792 | ) | | Other comprehensive income (loss) | | Other comprehensive income (loss) | | | (1,151) | | | (87) | | | 3,568 | | Comprehensive income | | 562,381 |
| | 526,584 |
| | 792,126 |
| Comprehensive income | | | 1,017,540 | | | 651,912 | | | 716,131 | | Net income attributable to noncontrolling interests | | (100,042 | ) | | (57,192 | ) | | (216,812 | ) | Net income attributable to noncontrolling interests | | | (145,964) | | | (130,465) | | | (129,716) | | Other comprehensive income (loss) attributable to noncontrolling interests | | 1,922 |
| | 5,256 |
| | 2,982 |
| | Other comprehensive income attributable to noncontrolling interests | | Other comprehensive income attributable to noncontrolling interests | | | (404) | | | (507) | | | (880) | | Comprehensive income attributable to Boston Properties, Inc. | | $ | 464,261 |
| | $ | 474,648 |
| | $ | 578,296 |
| Comprehensive income attributable to Boston Properties, Inc. | | | $ | 871,172 | | | $ | 520,940 | | | $ | 585,535 | |
_______________ | | (1) | Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties, Inc.’s Consolidated Statements of Operations. |
(1)Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties, Inc.’s Consolidated Statements of Operations.
The accompanying notes are an integral part of these consolidated financial statements. BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF EQUITY (in thousands) | | Common Stock | | Preferred Stock | | Additional Paid-in Capital | | Dividends in Excess of Earnings | | Treasury Stock, at cost | | Accumulated Other Comprehensive Loss | | Noncontrolling Interests - Common Units | | Noncontrolling Interests - Property Partnerships | | Total | | Shares | | Amount | | | Equity, December 31, 2017 | 154,325 | | | $ | 1,543 | | | $ | 200,000 | | | $ | 6,377,908 | | | $ | (712,343) | | | $ | (2,722) | | | $ | (50,429) | | | $ | 604,739 | | | $ | 1,683,760 | | | $ | 8,102,456 | | Cumulative effect of a change in accounting principle | — | | | — | | | — | | | — | | | 4,933 | | | — | | | — | | | 563 | | | — | | | 5,496 | | Redemption of operating partnership units to common stock | 83 | | | 2 | | | — | | | 2,878 | | | — | | | — | | | — | | | (2,880) | | | — | | | 0 | | Allocated net income for the year | — | | | — | | | — | | | — | | | 582,847 | | | — | | | — | | | 66,807 | | | 62,909 | | | 712,563 | | Dividends/distributions declared | — | | | — | | | — | | | — | | | (550,971) | | | — | | | — | | | (62,731) | | | — | | | (613,702) | | Shares issued pursuant to stock purchase plan | 6 | | | — | | | — | | | 797 | | | — | | | — | | | — | | | — | | | — | | | 797 | | Net activity from stock option and incentive plan | 44 | | | 0 | | | — | | | 1,729 | | | — | | | — | | | — | | | 36,861 | | | — | | | 38,590 | | Contributions from noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 46,701 | | | 46,701 | | Distributions to noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (82,501) | | | (82,501) | | Effective portion of interest rate contracts | — | | | — | | | — | | | — | | | — | | | — | | | (2,781) | | | (315) | | | — | | | (3,096) | | Amortization of interest rate contracts | — | | | — | | | — | | | — | | | — | | | — | | | 5,469 | | | 619 | | | 576 | | | 6,664 | | Reallocation of noncontrolling interest | — | | | — | | | — | | | 24,311 | | | — | | | — | | | — | | | (24,311) | | | — | | | 0 | | Equity, December 31, 2018 | 154,458 | | | 1,545 | | | 200,000 | | | 6,407,623 | | | (675,534) | | | (2,722) | | | (47,741) | | | 619,352 | | | 1,711,445 | | | 8,213,968 | | Cumulative effect of a change in accounting principle | — | | | — | | | — | | | — | | | (3,864) | | | — | | | — | | | (445) | | | (70) | | | (4,379) | | Redemption of operating partnership units to common stock | 145 | | | 2 | | | — | | | 4,883 | | | — | | | — | | | — | | | (4,885) | | | — | | | 0 | | Allocated net income for the period | — | | | — | | | — | | | — | | | 521,534 | | | — | | | — | | | 59,345 | | | 71,120 | | | 651,999 | | Dividends/distributions declared | — | | | — | | | — | | | — | | | (602,659) | | | — | | | — | | | (69,234) | | | — | | | (671,893) | | Shares issued pursuant to stock purchase plan | 6 | | | — | | | — | | | 688 | | | — | | | — | | | — | | | — | | | — | | | 688 | | Net activity from stock option and incentive plan | 181 | | | 1 | | | — | | | 8,771 | | | — | | | — | | | — | | | 36,228 | | | — | | | 45,000 | | Sale of an interest in property partnerships | — | | | — | | | — | | | (4,216) | | | — | | | — | | | — | | | — | | | 4,216 | | | 0 | | Acquisition of noncontrolling interest in property partnerships | — | | | — | | | — | | | (162,462) | | | — | | | — | | | — | | | — | | | (24,501) | | | (186,963) | | Contributions from noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 35,816 | | | 35,816 | | Distributions to noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (69,913) | | | (69,913) | | Effective portion of interest rate contracts | — | | | — | | | — | | | — | | | — | | | — | | | (6,060) | | | (691) | | | — | | | (6,751) | | Amortization of interest rate contracts | — | | | — | | | — | | | — | | | — | | | — | | | 5,466 | | | 622 | | | 576 | | | 6,664 | | Reallocation of noncontrolling interest | — | | | — | | | — | | | 39,432 | | | — | | | — | | | — | | | (39,432) | | | — | | | 0 | | Equity, December 31, 2019 | 154,790 | | | 1,548 | | | 200,000 | | | 6,294,719 | | | (760,523) | | | (2,722) | | | (48,335) | | | 600,860 | | | 1,728,689 | | | 8,014,236 | |
| BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF EQUITY (in thousands) | | BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF EQUITY (in thousands) | | | | Common Stock | | Preferred Stock | | Additional Paid-in Capital | | Dividends in Excess of Earnings | | Treasury Stock, at cost | | Accumulated Other Comprehensive Loss | | Noncontrolling Interests - Common Units | | Noncontrolling Interests - Property Partnerships | | Total | | | | | | | | | | | | | | | | | | | | | Shares | | Amount | | | Common Stock | | Preferred Stock | | Additional Paid-in Capital | | Dividends in Excess of Earnings | | Treasury Stock, at cost | | Accumulated Other Comprehensive Loss | | Noncontrolling Interests | | Total | | | Shares | | Amount | | | Equity, December 31, 2014 | 153,114 |
| | $ | 1,531 |
| | $ | 200,000 |
| | $ | 6,270,257 |
| | $ | (762,464 | ) | | $ | (2,722 | ) | | $ | (9,304 | ) | | $ | 2,205,638 |
| | $ | 7,902,936 |
| | Cumulative effect of a change in accounting principle | | Cumulative effect of a change in accounting principle | — | | | — | | | — | | | — | | | (1,505) | | | — | | | — | | | (174) | | | — | | | (1,679) | | Redemption of operating partnership units to common stock | 424 |
| | 5 |
| | — |
| | 14,338 |
| | — |
| | — |
| | — |
| | (14,343 | ) | | — |
| Redemption of operating partnership units to common stock | 857 | | | 9 | | | — | | | 29,689 | | | — | | | — | | | — | | | (29,698) | | | — | | | 0 | | Allocated net income for the year | — |
| | — |
| | — |
| | — |
| | 583,106 |
| | — |
| | — |
| | 211,685 |
| | 794,791 |
| | Allocated net income for the period | | Allocated net income for the period | — | | | — | | | — | | | — | | | 872,727 | | | — | | | — | | | 97,704 | | | 48,260 | | | 1,018,691 | | Dividends/distributions declared | — |
| | — |
| | — |
| | — |
| | (601,594 | ) | | — |
| | — |
| | (69,447 | ) | | (671,041 | ) | Dividends/distributions declared | — | | | — | | | — | | | — | | | (620,352) | | | — | | | — | | | (68,921) | | | — | | | (689,273) | | Shares issued pursuant to stock purchase plan | 6 |
| | — |
| | — |
| | 780 |
| | — |
| | — |
| | — |
| | — |
| | 780 |
| Shares issued pursuant to stock purchase plan | 7 | | | — | | | — | | | 759 | | | — | | | — | | | — | | | — | | | — | | | 759 | | Net activity from stock option and incentive plan | 36 |
| | — |
| | — |
| | 5,814 |
| | — |
| | — |
| | — |
| | 34,451 |
| | 40,265 |
| Net activity from stock option and incentive plan | 65 | | | 0 | | | — | | | 9,303 | | | — | | | — | | | — | | | 39,318 | | | — | | | 48,621 | | Acquisition of redeemable noncontrolling interest in property partnership | — |
| | — |
| | — |
| | (1,586 | ) | | — |
| | — |
| | — |
| | — |
| | (1,586 | ) | | Sale of interests in property partnerships | — |
| | — |
| | — |
| | (1,053 | ) | | — |
| | — |
| | — |
| | 1,053 |
| | — |
| | Contributions from noncontrolling interests in property partnerships | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,705 |
| | 2,705 |
| | Distributions to noncontrolling interests in property partnerships | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (170,049 | ) | | (170,049 | ) | | Dissolution of property partnership | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (4,082 | ) | | (4,082 | ) | | Effective portion of interest rate contracts | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (7,061 | ) | | (3,241 | ) | | (10,302 | ) | | Amortization of interest rate contracts | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,251 |
| | 259 |
| | 2,510 |
| | Reallocation of noncontrolling interest | — |
| | — |
| | — |
| | 17,137 |
| | — |
| | — |
| | — |
| | (17,137 | ) | | — |
| | Equity, December 31, 2015 | 153,580 |
| | 1,536 |
| | 200,000 |
| | 6,305,687 |
| | (780,952 | ) | | (2,722 | ) | | (14,114 | ) |
| 2,177,492 |
| | 7,886,927 |
| | Redemption of operating partnership units to common stock | 191 |
| | 2 |
| | — |
| | 6,459 |
| | — |
| | — |
| | — |
| | (6,461 | ) | | — |
| | Allocated net income for the year | — |
| | — |
| | — |
| | — |
| | 512,785 |
| | — |
| | — |
| | 57,192 |
| | 569,977 |
| | Dividends/distributions declared | — |
| | — |
| | — |
| | — |
| | (425,527 | ) | | — |
| | — |
| | (49,087 | ) | | (474,614 | ) | | Shares issued pursuant to stock purchase plan | 6 |
| | — |
| | — |
| | 730 |
| | — |
| | — |
| | — |
| | — |
| | 730 |
| | Net activity from stock option and incentive plan | 13 |
| | — |
| | — |
| | 3,979 |
| | — |
| | — |
| | — |
| | 27,931 |
| | 31,910 |
| | Sale of interests in property partnerships | — |
| | — |
| | — |
| | 1,195 |
| | — |
| | — |
| | — |
| | (1,195 | ) | | — |
| | Contributions from noncontrolling interests in property partnerships | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 11,951 |
| | 11,951 |
| Contributions from noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,219 | | | 8,219 | | Distributions to noncontrolling interests in property partnerships | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (51,564 | ) | | (51,564 | ) | Distributions to noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (58,811) | | | (58,811) | | Effective portion of interest rate contracts | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (41,502 | ) | | (5,642 | ) | | (47,144 | ) | Effective portion of interest rate contracts | — | | | — | | | — | | | — | | | — | | | — | | | (7,066) | | | (782) | | | — | | | (7,848) | | Amortization of interest rate contracts | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 3,365 |
| | 386 |
| | 3,751 |
| Amortization of interest rate contracts | — | | | — | | | — | | | — | | | — | | | — | | | 5,511 | | | 610 | | | 576 | | | 6,697 | | Reallocation of noncontrolling interest | — |
| | — |
| | — |
| | 15,374 |
| | — |
| | — |
| | — |
| | (15,374 | ) | | — |
| Reallocation of noncontrolling interest | — | | | — | | | — | | | 22,321 | | | — | | | — | | | — | | | (22,321) | | | — | | | 0 | | Equity, December 31, 2016 | 153,790 |
| | 1,538 |
| | 200,000 |
| | 6,333,424 |
| | (693,694 | ) | | (2,722 | ) | | (52,251 | ) | | 2,145,629 |
| | 7,931,924 |
| | Redemption of operating partnership units to common stock | 495 |
| | 5 |
| | — |
| | 16,911 |
| | — |
| | — |
| | — |
| | (16,916 | ) | | — |
| | Allocated net income for the year | — |
| | — |
| | — |
| | — |
| | 462,439 |
| | — |
| | — |
| | 100,042 |
| | 562,481 |
| | Dividends/distributions declared | — |
| | — |
| | — |
| | — |
| | (480,816 | ) | | — |
| | — |
| | (54,494 | ) | | (535,310 | ) | | Shares issued pursuant to stock purchase plan | 6 |
| | — |
| | — |
| | 795 |
| | — |
| | — |
| | — |
| | — |
| | 795 |
| | Net activity from stock option and incentive plan | 34 |
| | — |
| | — |
| | 3,899 |
| | — |
| | — |
| | — |
| | 33,393 |
| | 37,292 |
| | Cumulative effect of a change in accounting principle | — |
| | — |
| | — |
| | — |
| | (272 | ) | | — |
| | — |
| | (1,763 | ) | | (2,035 | ) | | Contributions from noncontrolling interests in property partnerships | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 161,585 |
| | 161,585 |
| | Distributions to noncontrolling interests in property partnerships | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (54,176 | ) | | (54,176 | ) | | Effective portion of interest rate contracts | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (3,305 | ) | | (2,828 | ) | | (6,133 | ) | | Amortization of interest rate contracts | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 5,127 |
| | 906 |
| | 6,033 |
| | Reallocation of noncontrolling interest | — |
| | — |
| | — |
| | 22,879 |
| | — |
| | — |
| | — |
| | (22,879 | ) | | — |
| | Equity, December 31, 2017 | 154,325 |
| | $ | 1,543 |
| | $ | 200,000 |
| | $ | 6,377,908 |
| | $ | (712,343 | ) | | $ | (2,722 | ) | | $ | (50,429 | ) | | $ | 2,288,499 |
| | $ | 8,102,456 |
| | Equity, December 31, 2020 | | Equity, December 31, 2020 | 155,719 | | | $ | 1,557 | | | $ | 200,000 | | | $ | 6,356,791 | | | $ | (509,653) | | | $ | (2,722) | | | $ | (49,890) | | | $ | 616,596 | | | $ | 1,726,933 | | | $ | 8,339,612 | |
The accompanying notes are an integral part of these consolidated financial statements. BOSTON PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | | | | | | | | | | | | | BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | | Year ended December 31, | | 2020 | | 2019 | | 2018 | Cash flows from operating activities: | | | | | | Net income | $ | 1,018,691 | | | $ | 651,999 | | | $ | 712,563 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | Depreciation and amortization | 683,751 | | | 677,764 | | | 645,649 | | Amortization of right of use assets - operating leases | 2,234 | | | 2,412 | | | 0 | | Impairment losses | 0 | | | 24,038 | | | 11,812 | | Non-cash compensation expense | 44,142 | | | 40,958 | | | 40,117 | | Loss (income) from unconsolidated joint ventures | 85,110 | | | (46,592) | | | (2,222) | | Distributions of net cash flow from operations of unconsolidated joint ventures | 31,892 | | | 17,155 | | | 6,703 | | (Gains) losses from investments in securities | (5,261) | | | (6,417) | | | 1,865 | | Allowance for current expected credit losses | 1,849 | | | 0 | | | 0 | | Non-cash portion of interest expense | 23,384 | | | 22,254 | | | 21,303 | | Settlement of accreted debt discount on redemption of unsecured senior notes | 0 | | | (763) | | | (483) | | Losses from early extinguishments of debt | 0 | | | 29,540 | | | 16,490 | | Gains on sales of real estate | (618,982) | | | (709) | | | (182,356) | | Change in assets and liabilities: | | | | | | Tenant and other receivables, net | 22,550 | | | (24,876) | | | 29,204 | | Notes receivable, net | (19) | | | 4 | | | (13) | | Accrued rental income, net | (97,099) | | | (56,817) | | | (43,662) | | Prepaid expenses and other assets | 12,488 | | | 2,965 | | | 12,472 | | Lease liabilities - finance leases | 568 | | | 0 | | | 0 | | Lease liabilities - operating leases | 1,533 | | | 1,616 | | | 0 | | Accounts payable and accrued expenses | (4,059) | | | 12,627 | | | 1,353 | | Accrued interest payable | 16,211 | | | 858 | | | 5,237 | | Other liabilities | 17,629 | | | (49,569) | | | 4,955 | | Tenant leasing costs | (79,772) | | | (117,282) | | | (130,742) | | Total adjustments | 138,149 | | | 529,166 | | | 437,682 | | Net cash provided by operating activities | 1,156,840 | | | 1,181,165 | | | 1,150,245 | | Cash flows from investing activities: | | | | | | Acquisitions of real estate | (137,976) | | | (149,031) | | | 0 | | Construction in progress | (482,507) | | | (546,060) | | | (694,791) | | Building and other capital improvements | (160,126) | | | (180,556) | | | (189,771) | | Tenant improvements | (234,423) | | | (251,831) | | | (210,034) | | Right of use assets - finance leases | 0 | | | (5,152) | | | 0 | | Proceeds from sales of real estate | 519,303 | | | 90,824 | | | 455,409 | | Capital contributions to unconsolidated joint ventures | (172,436) | | | (87,392) | | | (345,717) | | Capital distributions from unconsolidated joint ventures | 55,298 | | | 136,807 | | | 0 | | Cash and cash equivalents deconsolidated | 0 | | | (24,112) | | | 0 | | Deposit on capital lease | 0 | | | 0 | | | (13,615) | | Issuance of related party note receivable | 0 | | | 0 | | | (80,000) | |
| | | | | | | | | | | | | | For the year ended December 31, | | 2017 | | 2016 | | 2015 | | (in thousands) | Cash flows from operating activities: | | | | | | Net income | $ | 562,481 |
| | $ | 569,977 |
| | $ | 799,918 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | Depreciation and amortization | 617,547 |
| | 694,403 |
| | 639,542 |
| Impairment loss | — |
| | 1,783 |
| | — |
| Non-cash compensation expense | 35,361 |
| | 32,911 |
| | 29,183 |
| Income from unconsolidated joint ventures | (11,232 | ) | | (8,074 | ) | | (22,770 | ) | Gain on sale of investment in unconsolidated joint venture | — |
| | (59,370 | ) | | — |
| Distributions of net cash flow from operations of unconsolidated joint ventures | 26,858 |
| | 24,955 |
| | 8,469 |
| (Gains) losses from investments in securities | (3,678 | ) | | (2,273 | ) | | 653 |
| Non-cash portion of interest expense | (1,284 | ) | | (35,052 | ) | | (42,271 | ) | Settlement of accreted debt discount on redemption of unsecured senior notes | (1,980 | ) | | — |
| | — |
| (Gains) losses from early extinguishments of debt | (13,280 | ) | | 371 |
| | 21,837 |
| Gains on sales of real estate | (7,663 | ) | | (80,606 | ) | | (375,895 | ) | Change in assets and liabilities: | | | | | | Cash held in escrows | 8,194 |
| | 2,277 |
| | (18,284 | ) | Tenant and other receivables, net | 2,433 |
| | 3,688 |
| | (46,326 | ) | Accrued rental income, net | (58,355 | ) | | (28,127 | ) | | (73,911 | ) | Prepaid expenses and other assets | 51,425 |
| | 52,923 |
| | (16,877 | ) | Accounts payable and accrued expenses | 10,482 |
| | 15,666 |
| | (6,310 | ) | Accrued interest payable | (160,521 | ) | | 53,547 |
| | 26,854 |
| Other liabilities | (44,914 | ) | | (106,022 | ) | | (34,005 | ) | Tenant leasing costs | (104,429 | ) | | (96,103 | ) | | (90,396 | ) | Total adjustments | 344,964 |
| | 466,897 |
| | (507 | ) | Net cash provided by operating activities | 907,445 |
| | 1,036,874 |
| | 799,411 |
| Cash flows from investing activities: | | | | | | Acquisitions of real estate | (15,953 | ) | | (78,000 | ) | | — |
| Construction in progress | (608,404 | ) | | (500,350 | ) | | (374,664 | ) | Building and other capital improvements | (222,482 | ) | | (150,640 | ) | | (112,755 | ) | Tenant improvements | (205,331 | ) | | (230,298 | ) | | (144,572 | ) | Proceeds from sales of real estate | 29,810 |
| | 122,750 |
| | 602,600 |
| Proceeds from sales of real estate placed in escrow | (29,810 | ) | | (122,647 | ) | | (200,612 | ) | Proceeds from sales of real estate released from escrow | 29,810 |
| | 122,647 |
| | 634,165 |
| Cash placed in escrow for land sale contracts | — |
| | — |
| | (7,111 | ) | Cash released from escrow for land sale contracts | — |
| | 1,596 |
| | 5,312 |
| Cash released from escrow for investing activities | 9,230 |
| | 6,694 |
| | — |
| Cash placed in escrow for investment in unconsolidated joint venture | (25,000 | ) | | — |
| | — |
| Capital contributions to unconsolidated joint ventures | (109,015 | ) | | (575,795 | ) | | (38,207 | ) | Capital distributions from unconsolidated joint ventures | 251,000 |
| | 20,440 |
| | 24,527 |
| Proceeds from sale of investment in unconsolidated joint venture | — |
| | 55,707 |
| | — |
| Investments in marketable securities | — |
| | — |
| | (667,335 | ) | Investments in securities, net | (1,669 | ) | | (1,161 | ) | | (1,574 | ) | Net cash used in investing activities | (897,814 | ) | | (1,329,057 | ) | | (280,226 | ) | |
| | | | | | | | | | | | | | | | | | BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | | Year ended December 31, | | 2020 | | 2019 | | 2018 | Issuance of notes receivable, net | (9,800) | | | 0 | | | (19,455) | | Proceeds from notes receivable | 6,397 | | | 3,544 | | | 0 | | Investments in securities, net | 2,551 | | | (2,132) | | | (902) | | Net cash used in investing activities | (613,719) | | | (1,015,091) | | | (1,098,876) | | | | | | | | | | | | | | Cash flows from financing activities: | | | | | | Repayments of mortgage notes payable | (17,168) | | | (46,173) | | | (18,634) | | Proceeds from unsecured senior notes | 1,248,125 | | | 1,548,106 | | | 996,410 | | Redemption of unsecured senior notes | 0 | | | (699,237) | | | (699,517) | | Borrowings on unsecured line of credit | 265,000 | | | 380,000 | | | 745,000 | | Repayments of unsecured line of credit | (265,000) | | | (380,000) | | | (790,000) | | Proceeds from unsecured term loan | 0 | | | 0 | | | 500,000 | | Payments on finance lease obligations | 0 | | | (502) | | | 0 | | Payments on capital lease obligations | 0 | | | 0 | | | (1,353) | | Payments on real estate financing transactions | 0 | | | 0 | | | (960) | | Deferred financing costs | (10,416) | | | (13,213) | | | (8,362) | | Debt prepayment and extinguishment costs | 0 | | | (28,716) | | | (15,973) | | Net proceeds from equity transactions | 3,277 | | | 13,710 | | | (730) | | Dividends and distributions | (688,904) | | | (666,294) | | | (587,628) | | Contributions from noncontrolling interests in property partnerships | 8,219 | | | 35,816 | | | 46,701 | | Distributions to noncontrolling interests in property partnerships | (58,811) | | | (69,913) | | | (82,501) | | Acquisition of noncontrolling interests in property partnership | 0 | | | (186,963) | | | 0 | | Net cash provided by (used in) financing activities | 484,322 | | | (113,379) | | | 82,453 | | Net increase in cash and cash equivalents and cash held in escrows | 1,027,443 | | | 52,695 | | | 133,822 | | Cash and cash equivalents and cash held in escrows, beginning of period | 691,886 | | | 639,191 | | | 505,369 | | Cash and cash equivalents and cash held in escrows, end of period | $ | 1,719,329 | | | $ | 691,886 | | | $ | 639,191 | | | | | | | | Reconciliation of cash and cash equivalents and cash held in escrows: | | | | | | Cash and cash equivalents, beginning of period | $ | 644,950 | | | $ | 543,359 | | | $ | 434,767 | | Cash held in escrows, beginning of period | 46,936 | | | 95,832 | | | 70,602 | | Cash and cash equivalents and cash held in escrows, beginning of period | $ | 691,886 | | | $ | 639,191 | | | $ | 505,369 | | | | | | | | Cash and cash equivalents, end of period | $ | 1,668,742 | | | $ | 644,950 | | | $ | 543,359 | | Cash held in escrows, end of period | 50,587 | | | 46,936 | | | 95,832 | | Cash and cash equivalents and cash held in escrows, end of period | $ | 1,719,329 | | | $ | 691,886 | | | $ | 639,191 | | | | | | | | Supplemental disclosures: | | | | | | Cash paid for interest | $ | 433,492 | | | $ | 439,059 | | | $ | 416,019 | | Interest capitalized | $ | 53,881 | | | $ | 54,911 | | | $ | 65,766 | | | | | | | | Non-cash investing and financing activities: | | | | | | Write-off of fully depreciated real estate | $ | (99,494) | | | $ | (129,831) | | | $ | (135,431) | | Change in real estate included in accounts payable and accrued expenses | $ | (19,848) | | | $ | 89,245 | | | $ | (44,866) | | Real estate acquired through capital lease | $ | 0 | | | $ | 0 | | | $ | 12,397 | | Right of use assets obtained in exchange for lease liabilities | $ | 0 | | | $ | 287,540 | | | $ | 0 | |
| | | | | | | | | | | | | BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| For the year ended December 31, | | 2017 | | 2016 | | 2015 | | (in thousands) | Cash flows from financing activities: | | | | | | Proceeds from mortgage notes payable | 2,300,000 |
| | — |
| | — |
| Repayments of mortgage notes payable | (1,317,653 | ) | | (1,326,865 | ) | | (54,801 | ) | Proceeds from unsecured senior notes | 847,935 |
| | 1,989,790 |
| | — |
| Redemption of unsecured senior notes | (848,020 | ) | | — |
| | — |
| Borrowings on unsecured line of credit | 580,000 |
| | 25,000 |
| | — |
| Repayments of unsecured line of credit | (535,000 | ) | | (25,000 | ) | | — |
| Repayments of mezzanine notes payable | (306,000 | ) | | — |
| | — |
| Repayments of outside members’ notes payable | (70,424 | ) | | — |
| | — |
| Payments on capital lease obligations | (401 | ) | | (745 | ) | | (356 | ) | Proceeds from real estate financing transaction | — |
| | — |
| | 6,000 |
| Payments on real estate financing transactions | (2,840 | ) | | (5,260 | ) | | (3,103 | ) | Deposit on mortgage note payable interest rate lock | (23,200 | ) | | — |
| | — |
| Return of deposit on mortgage note payable interest rate lock | 23,200 |
| | — |
| | — |
| Deferred financing costs | (50,705 | ) | | (16,121 | ) | | (1,510 | ) | Net proceeds from equity transactions | 241 |
| | (271 | ) | | 799 |
| Redemption of preferred units | — |
| | — |
| | (633 | ) | Dividends and distributions | (526,578 | ) | | (671,626 | ) | | (1,226,199 | ) | Contributions from noncontrolling interests in property partnerships | 52,009 |
| | 11,951 |
| | 2,705 |
| Acquisition of noncontrolling interest in property partnership | — |
| | — |
| | (108,499 | ) | Distributions to noncontrolling interests in property partnerships | (54,342 | ) | | (55,474 | ) | | (172,949 | ) | Net cash provided by (used in) financing activities | 68,222 |
| | (74,621 | ) | | (1,558,546 | ) | Net increase (decrease) in cash and cash equivalents | 77,853 |
| | (366,804 | ) | | (1,039,361 | ) | Cash and cash equivalents, beginning of year | 356,914 |
| | 723,718 |
| | 1,763,079 |
| Cash and cash equivalents, end of year | $ | 434,767 |
| | $ | 356,914 |
| | $ | 723,718 |
| Supplemental disclosures: | | | | | | Cash paid for interest | $ | 598,486 |
| | $ | 433,591 |
| | $ | 481,826 |
| Interest capitalized | $ | 61,070 |
| | $ | 39,237 |
| | $ | 34,213 |
| Non-cash investing and financing activities: | | | | | | Write-off of fully depreciated real estate | $ | (124,891 | ) | | $ | (206,721 | ) | | $ | (45,455 | ) | Change in real estate included in accounts payable and accrued expenses | $ | 27,978 |
| | $ | (1,481 | ) | | $ | 74,985 |
| Real estate acquired through capital lease | $ | 28,962 |
| | $ | 21,000 |
| | $ | — |
| Outside members’ notes payable contributed to noncontrolling interests in property partnerships | $ | 109,576 |
| | $ | — |
| | $ | — |
| Marketable securities transferred in connection with the legal defeasance of mortgage note payable | $ | — |
| | $ | — |
| | $ | 667,335 |
| Mortgage note payable legally defeased | $ | — |
| | $ | — |
| | $ | 640,500 |
| Mortgage note payable assigned in connection with the sale of real estate | $ | — |
| | $ | — |
| | $ | 116,993 |
| Dividends and distributions declared but not paid | $ | 139,040 |
| | $ | 130,308 |
| | $ | 327,320 |
| Conversions of noncontrolling interests to stockholders’ equity | $ | 16,916 |
| | $ | 6,461 |
| | $ | 14,343 |
| Issuance of restricted securities to employees and directors | $ | 35,989 |
| | $ | 33,615 |
| | $ | 43,355 |
| | | | | | |
| | | | | | | | | | | | | | | | | | BOSTON PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | | Year ended December 31, | | 2020 | | 2019 | | 2018 | Prepaid rent reclassified to right of use asset | $ | 0 | | | $ | 15,000 | | | $ | 0 | | Accrued rental income, net deconsolidated | $ | (4,558) | | | $ | 0 | | | $ | 0 | | Tenant leasing costs, net deconsolidated | $ | (3,462) | | | $ | 0 | | | $ | 0 | | Building and other capital improvements, net deconsolidated | $ | (111,889) | | | $ | (12,767) | | | $ | 0 | | Tenant improvements, net deconsolidated | $ | (12,331) | | | $ | 0 | | | $ | 0 | | Right of use asset - finance lease deconsolidated | $ | 0 | | | $ | (135,004) | | | $ | 0 | | Lease liability - finance lease deconsolidated | $ | 0 | | | $ | 119,534 | | | $ | 0 | | Investment in unconsolidated joint venture recorded upon deconsolidation | $ | 347,898 | | | $ | 29,246 | | | $ | 0 | | Dividends and distributions declared but not paid | $ | 171,082 | | | $ | 170,713 | | | $ | 165,114 | | Conversions of noncontrolling interests to stockholders’ equity | $ | 29,698 | | | $ | 4,885 | | | $ | 2,880 | | Issuance of restricted securities to employees and non-employee directors | $ | 42,607 | | | $ | 37,622 | | | $ | 37,052 | |
The accompanying notes are an integral part of these consolidated financial statements.
Management’s Report on Internal Control over Financial Reporting Management of Boston Properties, Inc., the sole general partner of Boston Properties Limited Partnership, is responsible for establishing and maintaining adequate internal control over financial reporting for Boston Properties Limited Partnership. Boston Properties Limited Partnership’s internal control over financial reporting is a process designed under the supervision of the principal executive officer and principal financial officer of Boston Properties, Inc. to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Boston Properties Limited Partnership’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. As of the end of Boston Properties Limited Partnership’s 20172020 fiscal year, management conducted assessments of the effectiveness of Boston Properties Limited Partnership’s internal control over financial reporting based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on these assessments, management has determined that Boston Properties Limited Partnership’s internal control over financial reporting as of December 31, 20172020 was effective. Boston Properties Limited Partnership’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of Boston Properties, Inc.; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Boston Properties Limited Partnership’s assets that could have a material effect on our financial statements. The effectiveness of Boston Properties Limited Partnership’s internal control over financial reporting as of December 31, 20172020 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report appearing on page 122,126, which expresses an unqualified opinion on the effectiveness of Boston Properties Limited Partnership’s internal control over financial reporting as of December 31, 2017.2020.
Report of Independent Registered Public Accounting Firm
To the Partners of Boston Properties Limited Partnership: Partnership
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Boston Properties Limited Partnership and its subsidiaries (the “Partnership”) as of December 31, 20172020 and December 31, 2016,2019, and the related consolidated statements of operations, of comprehensive income, partners’of capital and noncontrolling interests and of cash flows for each of the three years in the period ended December 31, 2017,2020, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Partnership's internal control over financial reporting as of December 31, 2017,2020, based on criteria established in Internal Control - Integrated Framework(2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Partnership as of December 31, 20172020 and December 31, 2016,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20172020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2020, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.
Basis for Opinions
The Partnership's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management'sManagement’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Partnership’s consolidated financial statements and on the Partnership's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")(PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Impairment Assessments of Long-Lived Assets and Investments in Unconsolidated Joint Ventures As described in Notes 2, 3 and 6 to the consolidated financial statements, the Partnership’s total real estate balance was $17,547.5 million and its investments in unconsolidated joint ventures was $1,273.9 million as of December 31, 2020. During 2020, the Partnership did not recognize an impairment loss related to its long-lived assets and recognized a $60.5 million other-than-temporary-impairment loss related to an investment in unconsolidated joint venture. Management reviews its long-lived assets for indicators of impairment following the end of each quarter and when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. This evaluation of long-lived assets is dependent on a number of factors, including when there is an event or adverse change in the operating performance of the long-lived asset or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life or hold period. Management reviews its unconsolidated joint ventures for indicators of impairment on a quarterly basis and records impairment charges when events or circumstances change indicating that a decline in the fair values below the carrying amounts has occurred and such decline is other-than-temporary. This evaluation of the investments in unconsolidated joint ventures is dependent on a number of factors, including the performance of each investment and market conditions. The Partnership will record an impairment charge if it determines that a decline in the fair value below the carrying amount of an investment in an unconsolidated joint venture is other-than-temporary. The fair value is calculated using discounted cash flows which is subjective and considers assumptions regarding future occupancy, future rental rates, future capital requirements, discount rates and capitalization rates. The principal considerations for our determination that performing procedures relating to the impairment assessments of long-lived assets and investments in unconsolidated joint ventures is a critical audit matter are (i) the significant judgment by management in identifying the indicators of impairment for long lived assets, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating evidence related to identifying the indicators of impairment for long-lived assets; (ii) the significant judgment by management in identifying the indicators of impairment for investments in unconsolidated joint ventures, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating evidence related to the indicators of impairment for investments in unconsolidated joint ventures; (iii) the significant judgment by management when developing the fair value measurement of the investments in unconsolidated joint ventures relating to potential other-than-temporary impairments, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s assumptions related to future occupancy, future rental rates, future capital requirements, discount rate and capitalization rate; and, (iv) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to (i) the identification of the indicators of impairment for long-lived assets, (ii) the identification of the indicators of impairment for investments in unconsolidated joint ventures, and (iii) developing the fair value measurement of the investments in unconsolidated joint ventures in the evaluation of potential other-than-temporary impairments. For the long-lived assets, the procedures included, among others, evaluating the reasonableness of management’s assessment of the indicators of impairment for long lived assets by considering the anticipated hold
period, market economic conditions, operating performance of the asset, or evidence obtained in other areas of the audit that may be indicative of an indicator of impairment of the long-lived assets. For the investments in unconsolidated joint ventures, the procedures, included, among others, (i) evaluating the reasonableness of management’s identification of changes in the performance of each investment and market conditions indicating that there may be a decline in the fair values of the investments in unconsolidated joint ventures below the carrying amounts has occurred and such decline is other-than-temporary by considering changes in the performance of the investments and market conditions, or evidence obtained in other areas of the audit and (ii) evaluating the reasonableness of aforementioned assumptions, by consideration of the past performance of the investment in unconsolidated joint ventures and whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation the appropriateness of the discounted cash flow model and reasonableness of the assumptions.
/s/ PricewaterhouseCoopers LLP Boston, Massachusetts
Boston, MAFebruary 26, 2021
February 28, 2018
We have served as the Partnership’s auditor since 1997.
| | | | | | | | | BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS (in thousands, except for unit amounts) | | December 31, 2017 | | December 31, 2016 | ASSETS | | | | Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $7,172,718 and $6,760,078 at December 31, 2017 and 2016, respectively) | $ | 20,685,164 |
| | $ | 19,733,872 |
| Less: accumulated depreciation (amounts related to VIEs of $(854,172) and $(758,640) at December 31, 2017 and 2016, respectively) | (4,496,959 | ) | | (4,136,364 | ) | Total real estate | 16,188,205 |
| | 15,597,508 |
| Cash and cash equivalents (amounts related to VIEs of $304,955 and $253,999 at December 31, 2017 and 2016, respectively) | 434,767 |
| | 356,914 |
| Cash held in escrows (amounts related to VIEs of $6,135 and $4,955 at December 31, 2017 and 2016, respectively) | 70,602 |
| | 63,174 |
| Investments in securities | 29,161 |
| | 23,814 |
| Tenant and other receivables, net (amounts related to VIEs of $27,057 and $23,525 at December 31, 2017 and 2016, respectively) | 92,186 |
| | 92,548 |
| Accrued rental income, net (amounts related to VIEs of $242,589 and $224,185 at December 31, 2017 and 2016, respectively) | 861,575 |
| | 799,138 |
| Deferred charges, net (amounts related to VIEs of $281,678 and $290,436 at December 31, 2017 and 2016, respectively) | 679,038 |
| | 686,163 |
| Prepaid expenses and other assets (amounts related to VIEs of $33,666 and $42,718 at December 31, 2017 and 2016, respectively) | 77,971 |
| | 129,666 |
| Investments in unconsolidated joint ventures | 619,925 |
| | 775,198 |
| Total assets | $ | 19,053,430 |
| | $ | 18,524,123 |
| LIABILITIES AND CAPITAL | | | | Liabilities: | | | | Mortgage notes payable, net (amounts related to VIEs of $2,939,183 and $2,018,483 at December 31, 2017 and 2016, respectively) | $ | 2,979,281 |
| | $ | 2,063,087 |
| Unsecured senior notes, net | 7,247,330 |
| | 7,245,953 |
| Unsecured line of credit | 45,000 |
| | — |
| Unsecured term loan | — |
| | — |
| Mezzanine notes payable (amounts related to VIEs of $0 and $307,093 at December 31, 2017 and 2016, respectively) | — |
| | 307,093 |
| Outside members’ notes payable (amounts related to VIEs of $0 and $180,000 at December 31, 2017 and 2016, respectively) | — |
| | 180,000 |
| Accounts payable and accrued expenses (amounts related to VIEs of $106,683 and $110,457 at December 31, 2017 and 2016, respectively) | 331,500 |
| | 298,524 |
| Dividends and distributions payable | 139,040 |
| | 130,308 |
| Accrued interest payable (amounts related to VIEs of $6,907 and $162,226 at December 31, 2017 and 2016, respectively) | 83,646 |
| | 243,933 |
| Other liabilities (amounts related to VIEs of $164,806 and $175,146 at December 31, 2017 and 2016, respectively) | 443,980 |
| | 450,821 |
| Total liabilities | 11,269,777 |
| | 10,919,719 |
| Commitments and contingencies | — |
| | — |
| Noncontrolling interests: | | | | Redeemable partnership units—16,810,378 and 17,079,511 common units and 818,343 and 904,588 long term incentive units outstanding at redemption value at December 31, 2017 and December 31, 2016, respectively | 2,292,263 |
| | 2,262,040 |
| Capital: | | | | 5.25% Series B cumulative redeemable preferred units, liquidation preference $2,500 per unit, 80,000 units issued and outstanding at December 31, 2017 and December 31, 2016 | 193,623 |
| | 193,623 |
| Boston Properties Limited Partnership partners’ capital—1,719,540 and 1,717,743 general partner units and 152,605,746 and 152,072,432 limited partner units outstanding at December 31, 2017 and December 31, 2016, respectively | 3,614,007 |
| | 3,618,094 |
| Noncontrolling interests in property partnerships | 1,683,760 |
| | 1,530,647 |
| Total capital | 5,491,390 |
| | 5,342,364 |
| Total liabilities and capital | $ | 19,053,430 |
| | $ | 18,524,123 |
|
| | | | | | | | | | | | | | | BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS (in thousands, except for unit amounts) | | | December 31, 2020 | | December 31, 2019 | ASSETS | | | | | Real estate, at cost (amounts related to variable interest entities (“VIEs”) of $6,592,019 and $6,497,031 at December 31, 2020 and December 31, 2019, respectively) | | $ | 22,592,301 | | | $ | 22,107,755 | | Right of use assets - finance leases (amounts related to VIEs of $21,000 and $21,000 at December 31, 2020 and December 31, 2019, respectively) | | 237,393 | | | 237,394 | | Right of use assets - operating leases | | 146,406 | | | 148,640 | | Less: accumulated depreciation (amounts related to VIEs of $(1,158,548) and $(1,058,495) at December 31, 2020 and December 31, 2019, respectively) | | (5,428,576) | | | (5,162,908) | | Total real estate | | 17,547,524 | | | 17,330,881 | | Cash and cash equivalents (amounts related to VIEs of $340,642 and $280,033 at December 31, 2020 and December 31, 2019, respectively) | | 1,668,742 | | | 644,950 | | Cash held in escrows | | 50,587 | | | 46,936 | | Investments in securities | | 39,457 | | | 36,747 | | Tenant and other receivables, net (amounts related to VIEs of $10,911 and $28,918 at December 31, 2020 and December 31, 2019, respectively) | | 77,411 | | | 112,807 | | Related party note receivable, net | | 77,552 | | | 80,000 | | Notes receivable, net | | 18,729 | | | 15,920 | | Accrued rental income, net (amounts related to VIEs of $336,594 and $298,318 at December 31, 2020 and December 31, 2019, respectively) | | 1,122,502 | | | 1,038,788 | | Deferred charges, net (amounts related to VIEs of $183,306 and $214,769 at December 31, 2020 and December 31, 2019, respectively) | | 640,085 | | | 689,213 | | Prepaid expenses and other assets (amounts related to VIEs of $13,137 and $20,931 at December 31, 2020 and December 31, 2019, respectively) | | 33,840 | | | 41,685 | | Investments in unconsolidated joint ventures | | 1,310,478 | | | 955,647 | | Total assets | | $ | 22,586,907 | | | $ | 20,993,574 | | LIABILITIES AND CAPITAL | | | | | Liabilities: | | | | | Mortgage notes payable, net (amounts related to VIEs of $2,907,590 and $2,918,806 at December 31, 2020 and December 31, 2019, respectively) | | $ | 2,909,081 | | | $ | 2,922,408 | | Unsecured senior notes, net | | 9,639,287 | | | 8,390,459 | | Unsecured line of credit | | 0 | | | 0 | | Unsecured term loan, net | | 499,390 | | | 498,939 | | Lease liabilities - finance leases (amounts related to VIEs of $20,306 and $20,189 at December 31, 2020 and December 31, 2019, respectively) | | 236,492 | | | 224,042 | | Lease liabilities - operating leases | | 201,713 | | | 200,180 | | Accounts payable and accrued expenses (amounts related to VIEs of $23,128 and $45,777 at December 31, 2020 and December 31, 2019, respectively) | | 336,264 | | | 377,553 | | Dividends and distributions payable | | 171,082 | | | 170,713 | | Accrued interest payable | | 106,288 | | | 90,016 | | Other liabilities (amounts related to VIEs of $158,805 and $140,110 at December 31, 2020 and December 31, 2019, respectively) | | 412,084 | | | 387,994 | | Total liabilities | | 14,511,681 | | | 13,262,304 | | Commitments and contingencies (See Note 10) | | | | | Redeemable deferred stock units— 72,966 and 60,676 units outstanding at redemption value at December 31, 2020 and December 31, 2019, respectively | | 6,897 | | | 8,365 | |
| | | | | | | | | | | | | | | BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS (in thousands, except for unit amounts) | | | December 31, 2020 | | December 31, 2019 | Noncontrolling interests: | | | | | Redeemable partnership units— 16,037,121 and 16,764,466 common units and 1,336,115 and 1,143,215 long term incentive units outstanding at redemption value at December 31, 2020 and December 31, 2019, respectively | | 1,643,024 | | | 2,468,753 | | Capital: | | | | | 5.25% Series B cumulative redeemable preferred units, liquidation preference $2,500 per unit, 80,000 units issued and outstanding at December 31, 2020 and December 31, 2019 | | 193,623 | | | 193,623 | | Boston Properties Limited Partnership partners’ capital— 1,730,921 and 1,726,980 general partner units and 153,987,904 and 153,063,318 limited partner units outstanding at December 31, 2020 and December 31, 2019, respectively | | 4,554,639 | | | 3,380,175 | | Accumulated other comprehensive loss | | (49,890) | | | (48,335) | | Total partners’ capital | | 4,698,372 | | | 3,525,463 | | Noncontrolling interests in property partnerships | | 1,726,933 | | | 1,728,689 | | Total capital | | 6,425,305 | | | 5,254,152 | | Total liabilities and capital | | $ | 22,586,907 | | | $ | 20,993,574 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | | | | | | | | | | | | BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS | | For the year ended December 31, | | 2017 | | 2016 | | 2015 | | (in thousands, except for per unit amounts) | Revenue | | | | | | Rental | | | | | | Base rent | $ | 2,049,368 |
| | $ | 2,017,767 |
| | $ | 1,964,732 |
| Recoveries from tenants | 367,500 |
| | 358,975 |
| | 355,508 |
| Parking and other | 105,000 |
| | 100,910 |
| | 101,981 |
| Total rental revenue | 2,521,868 |
| | 2,477,652 |
| | 2,422,221 |
| Hotel revenue | 45,603 |
| | 44,884 |
| | 46,046 |
| Development and management services | 34,605 |
| | 28,284 |
| | 22,554 |
| Total revenue | 2,602,076 |
| | 2,550,820 |
| | 2,490,821 |
| Expenses | | | | | | Operating | | | | | | Rental | 929,977 |
| | 889,768 |
| | 872,252 |
| Hotel | 32,059 |
| | 31,466 |
| | 32,084 |
| General and administrative | 113,715 |
| | 105,229 |
| | 96,319 |
| Transaction costs | 668 |
| | 2,387 |
| | 1,259 |
| Impairment loss | — |
| | 1,783 |
| | — |
| Depreciation and amortization | 609,407 |
| | 682,776 |
| | 631,549 |
| Total expenses | 1,685,826 |
| | 1,713,409 |
| | 1,633,463 |
| Operating income | 916,250 |
| | 837,411 |
| | 857,358 |
| Other income (expense) | | | | | | Income from unconsolidated joint ventures | 11,232 |
| | 8,074 |
| | 22,770 |
| Gain on sale of investment in unconsolidated joint venture | — |
| | 59,370 |
| | — |
| Interest and other income | 5,783 |
| | 7,230 |
| | 6,777 |
| Gains (losses) from investments in securities | 3,678 |
| | 2,273 |
| | (653 | ) | Interest expense | (374,481 | ) | | (412,849 | ) | | (432,196 | ) | Gains (losses) from early extinguishments of debt | 496 |
| | (371 | ) | | (22,040 | ) | Losses from interest rate contracts | — |
| | (140 | ) | | — |
| Income before gains on sales of real estate | 562,958 |
| | 500,998 |
| | 432,016 |
| Gains on sales of real estate | 8,240 |
| | 82,775 |
| | 377,093 |
| Net income | 571,198 |
| | 583,773 |
| | 809,109 |
| Net income attributable to noncontrolling interests | | | | | | Noncontrolling interests in property partnerships | (47,832 | ) | | 2,068 |
| | (149,855 | ) | Noncontrolling interest—redeemable preferred units | — |
| | — |
| | (6 | ) | Net income attributable to Boston Properties Limited Partnership | 523,366 |
| | 585,841 |
| | 659,248 |
| Preferred distributions | (10,500 | ) | | (10,500 | ) | | (10,500 | ) | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 512,866 |
| | $ | 575,341 |
| | $ | 648,748 |
| Basic earnings per common unit attributable to Boston Properties Limited Partnership | | | | | | Net income | $ | 2.99 |
| | $ | 3.36 |
| | $ | 3.79 |
| Weighted average number of common units outstanding | 171,661 |
| | 171,361 |
| | 171,139 |
| Diluted earnings per common unit attributable to Boston Properties Limited Partnership | | | | | | Net income | $ | 2.98 |
| | $ | 3.35 |
| | $ | 3.78 |
| Weighted average number of common and common equivalent units outstanding | 171,861 |
| | 171,623 |
| | 171,512 |
| | | | | | | Distributions per common unit | $ | 3.05 |
| | $ | 2.70 |
| | $ | 3.85 |
|
BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per unit amounts) | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | | | 2020 | | 2019 | | 2018 | Revenue | | | | | | | | | | Lease | | | | | $ | 2,646,261 | | | $ | 2,758,014 | | | $ | — | | Base rent | | | | | — | | | — | | | 2,103,723 | | Recoveries from tenants | | | | | — | | | — | | | 402,066 | | Parking and other | | | | | 70,680 | | | 103,534 | | | 107,421 | | Hotel | | | | | 7,478 | | | 48,589 | | | 49,118 | | Development and management services | | | | | 29,641 | | | 40,039 | | | 45,158 | | Direct reimbursements of payroll and related costs from management services contracts | | | | | 11,626 | | | 10,386 | | | 9,590 | | Total revenue | | | | | 2,765,686 | | | 2,960,562 | | | 2,717,076 | | Expenses | | | | | | | | | | Operating | | | | | | | | | | Rental | | | | | 1,017,208 | | | 1,050,010 | | | 979,151 | | Hotel | | | | | 13,136 | | | 34,004 | | | 33,863 | | General and administrative | | | | | 133,112 | | | 140,777 | | | 121,722 | | Payroll and related costs from management services contracts | | | | | 11,626 | | | 10,386 | | | 9,590 | | Transaction costs | | | | | 1,531 | | | 1,984 | | | 1,604 | | Depreciation and amortization | | | | | 676,666 | | | 669,956 | | | 637,891 | | Total expenses | | | | | 1,853,279 | | | 1,907,117 | | | 1,783,821 | | Other income (expense) | | | | | | | | | | Income (loss) from unconsolidated joint ventures | | | | | (85,110) | | | 46,592 | | | 2,222 | | Gains on sales of real estate | | | | | 631,945 | | | 858 | | | 190,716 | | Interest and other income (loss) | | | | | 5,953 | | | 18,939 | | | 10,823 | | Gains (losses) from investments in securities | | | | | 5,261 | | | 6,417 | | | (1,865) | | Impairment loss | | | | | 0 | | | (22,272) | | | (10,181) | | Loss from early extinguishment of debt | | | | | 0 | | | (29,540) | | | (16,490) | | Interest expense | | | | | (431,717) | | | (412,717) | | | (378,168) | | Net income | | | | | 1,038,739 | | | 661,722 | | | 730,312 | | Net income attributable to noncontrolling interests | | | | | | | | | | Noncontrolling interests in property partnerships | | | | | (48,260) | | | (71,120) | | | (62,909) | | Net income attributable to Boston Properties Limited Partnership | | | | | 990,479 | | | 590,602 | | | 667,403 | | Preferred distributions | | | | | (10,500) | | | (10,500) | | | (10,500) | | Net income attributable to Boston Properties Limited Partnership common unitholders | | | | | $ | 979,979 | | | $ | 580,102 | | | $ | 656,903 | | Basic earnings per common unit attributable to Boston Properties Limited Partnership | | | | | | | | | | Net income | | | | | $ | 5.67 | | | $ | 3.37 | | | $ | 3.82 | | Weighted average number of common units outstanding | | | | | 172,643 | | | 172,200 | | | 171,912 | | Diluted earnings per common unit attributable to Boston Properties Limited Partnership | | | | | | | | | | Net income | | | | | $ | 5.67 | | | $ | 3.36 | | | $ | 3.81 | | Weighted average number of common and common equivalent units outstanding | | | | | 172,728 | | | 172,501 | | | 172,167 | |
The accompanying notes are an integral part of these consolidated financial statements.
BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) | | | | For the year ended December 31, | | | | | | | | | | | | | | | | | | | | | | 2017 | | 2016 | | 2015 | | | | Year ended December 31, | | (in thousands) | | | | 2020 | | 2019 | | 2018 | Net income | | $ | 571,198 |
| | $ | 583,773 |
| | $ | 809,109 |
| Net income | | | $ | 1,038,739 | | | $ | 661,722 | | | $ | 730,312 | | Other comprehensive loss: | | | | | | | | Other comprehensive income (loss): | | Other comprehensive income (loss): | | | Effective portion of interest rate contracts | | (6,133 | ) | | (47,144 | ) | | (10,302 | ) | Effective portion of interest rate contracts | | | (7,848) | | | (6,751) | | | (3,096) | | Amortization of interest rate contracts (1) | | 6,033 |
| | 3,751 |
| | 2,510 |
| Amortization of interest rate contracts (1) | | | 6,697 | | | 6,664 | | | 6,664 | | Other comprehensive loss | | (100 | ) | | (43,393 | ) | | (7,792 | ) | | Other comprehensive income (loss) | | Other comprehensive income (loss) | | | (1,151) | | | (87) | | | 3,568 | | Comprehensive income | | 571,098 |
| | 540,380 |
| | 801,317 |
| Comprehensive income | | | 1,037,588 | | | 661,635 | | | 733,880 | | Comprehensive income attributable to noncontrolling interests | | (45,704 | ) | | 2,945 |
| | (147,433 | ) | Comprehensive income attributable to noncontrolling interests | | | (48,836) | | | (71,696) | | | (63,485) | | Comprehensive income attributable to Boston Properties Limited Partnership | | $ | 525,394 |
| | $ | 543,325 |
| | $ | 653,884 |
| Comprehensive income attributable to Boston Properties Limited Partnership | | | $ | 988,752 | | | $ | 589,939 | | | $ | 670,395 | |
_______________ | | (1) | Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties Limited Partnership's Consolidated Statements of Operations. |
(1)Amounts reclassified from comprehensive income primarily to interest expense within Boston Properties Limited Partnership’s Consolidated Statements of Operations.
The accompanying notes are an integral part of these consolidated financial statements. BOSTON PROPERTIES LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 and 2015
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS (in thousands) | | Units | | Capital | | | | General Partner | | Limited Partner | | Partners’ Capital (General and Limited Partners) | | Preferred Units | | Accumulated Other Comprehensive Loss | | Noncontrolling Interests - Property Partnerships | | Total Capital | | Noncontrolling Interests - Redeemable Partnership Units | | | | | Equity, December 31, 2017 | 1,720 | | | 152,606 | | | $ | 3,664,436 | | | $ | 193,623 | | 0 | $ | (50,429) | | 0 | $ | 1,683,760 | | | $ | 5,491,390 | | | $ | 2,292,263 | | Cumulative effect of a change in accounting principle | — | | | — | | | 4,933 | | | — | | | — | | | — | | | 4,933 | | | 563 | | Contributions | 1 | | | 49 | | | 1,642 | | | — | | | — | | | — | | | 1,642 | | | 34,680 | | Allocated net income for the period | — | | | — | | | 590,096 | | | 10,500 | | | — | | | 62,909 | | | 663,505 | | | 66,807 | | Distributions | — | | | — | | | (540,471) | | | (10,500) | | | — | | | — | | | (550,971) | | | (62,731) | | Unearned compensation | — | | | — | | | 884 | | | — | | | — | | | — | | | 884 | | | 2,181 | | Conversion of redeemable partnership units | 1 | | | 81 | | | 2,880 | | | — | | | — | | | — | | | 2,880 | | | (2,880) | | Adjustment to reflect redeemable partnership units at redemption value | — | | | — | | | 330,596 | | | — | | | — | | | — | | | 330,596 | | | (330,596) | | Effective portion of interest rate contracts | — | | | — | | | — | | | — | | | (2,781) | | | 0 | | | (2,781) | | | (315) | | Amortization of interest rate contracts | — | | | — | | | — | | | — | | | 5,469 | | | 576 | | | 6,045 | | | 619 | | Contributions from noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | 46,701 | | | 46,701 | | | — | | Distributions to noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | (82,501) | | | (82,501) | | | — | | Equity, December 31, 2018 | 1,722 | | | 152,736 | | | 4,054,996 | | | 193,623 | | | (47,741) | | | 1,711,445 | | | 5,912,323 | | | 2,000,591 | | Cumulative effect of a change in accounting principle | — | | | — | | | (3,864) | | | — | | | — | | | (70) | | | (3,934) | | | (445) | | Contributions | 3 | | | 185 | | | 17,115 | | | — | | | — | | | — | | | 17,115 | | | 34,217 | | Allocated net income for the period | — | | | — | | | 520,757 | | | 10,500 | | | — | | | 71,120 | | | 602,377 | | | 59,345 | | Distributions | — | | | — | | | (592,159) | | | (10,500) | | | — | | | — | | | (602,659) | | | (69,234) | | Unearned compensation | — | | | — | | | (7,655) | | | — | | | — | | | — | | | (7,655) | | | 2,011 | | Conversion of redeemable partnership units | 2 | | | 142 | | | 4,885 | | | — | | | — | | | — | | | 4,885 | | | (4,885) | | Adjustment to reflect redeemable partnership units at redemption value | — | | | — | | | (447,222) | | | — | | | — | | | — | | | (447,222) | | | 447,222 | | Effective portion of interest rate contracts | — | | | — | | | — | | | — | | | (6,060) | | | 0 | | | (6,060) | | | (691) | | Amortization of interest rate contracts | — | | | — | | | — | | | — | | | 5,466 | | | 576 | | | 6,042 | | | 622 | | Acquisition of noncontrolling interest in property partnership | — | | | — | | | (162,462) | | | — | | | — | | | (24,501) | | | (186,963) | | | — | | Sale of an interest in property partnerships | — | | | — | | | (4,216) | | | — | | | — | | | 4,216 | | | — | | | — | | Contributions from noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | 35,816 | | | 35,816 | | | — | | Distributions to noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | (69,913) | | | (69,913) | | | — | | Equity, December 31, 2019 | 1,727 | | | 153,063 | | | 3,380,175 | | | 193,623 | | | (48,335) | | | 1,728,689 | | | 5,254,152 | | | 2,468,753 | |
| BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS (in thousands) | | BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CAPITAL AND NONCONTROLLING INTERESTS (in thousands) | | | | Units | | Capital | | | | | | | General Partner | | Limited Partner | | Partners’ Capital (General and Limited Partners) | | Preferred Units | | Accumulated Other Comprehensive Loss | | Noncontrolling Interests - Property Partnerships | | Total Capital | | Noncontrolling Interests - Redeemable Partnership Units | | Total Partners’ Capital | | | | | Balance at December 31, 2014 | $ | 3,639,916 |
| | Cumulative effect of a change in accounting principle | | Cumulative effect of a change in accounting principle | — | | | — | | | (1,505) | | | — | | | — | | | — | | | (1,505) | | | (174) | | Contributions | 4,071 |
| Contributions | 1 | | | 72 | | | 7,529 | | | — | | | — | | | — | | | 7,529 | | | 38,841 | | Acquisition of redeemable noncontrolling interest in property partnership | (1,586 | ) | | Net income allocable to general and limited partner units | 592,297 |
| | Allocated net income for the period | | Allocated net income for the period | — | | | — | | | 882,275 | | | 10,500 | | | — | | | 48,260 | | | 941,035 | | | 97,704 | | Distributions | (601,594 | ) | Distributions | — | | | — | | | (609,852) | | | (10,500) | | | — | | | — | | | (620,352) | | | (68,921) | | Other comprehensive loss | (4,810 | ) | | Unearned compensation | 1,470 |
| Unearned compensation | — | | | — | | | 2,533 | | | — | | | — | | | — | | | 2,533 | | | 477 | | Conversion of redeemable partnership units | 14,343 |
| Conversion of redeemable partnership units | 3 | | | 853 | | | 29,689 | | | — | | | — | | | — | | | 29,689 | | | (29,689) | | Adjustment to reflect redeemable partnership units at redemption value | 40,415 |
| Adjustment to reflect redeemable partnership units at redemption value | — | | | — | | | 863,795 | | | — | | | — | | | — | | | 863,795 | | | (863,795) | | Balance at December 31, 2015 | 3,684,522 |
| | Contributions | 3,144 |
| | Net income allocable to general and limited partner units | 526,581 |
| | Distributions | (425,527 | ) | | Other comprehensive loss | (38,137 | ) | | Unearned compensation | 2,760 |
| | Conversion of redeemable partnership units | 6,461 |
| | Adjustment to reflect redeemable partnership units at redemption value | 51,913 |
| | Balance at December 31, 2016 | 3,811,717 |
| | Contributions | 4,937 |
| | Net income allocable to general and limited partner units | 471,156 |
| | Distributions | (480,816 | ) | | Other comprehensive income | 1,822 |
| | Cumulative effect of a change in accounting principle | (272 | ) | | Unearned compensation | (243 | ) | | Conversion of redeemable partnership units | 16,916 |
| | Adjustment to reflect redeemable partnership units at redemption value | (17,587 | ) | | Balance at December 31, 2017 | $ | 3,807,630 |
| | Effective portion of interest rate contracts | | Effective portion of interest rate contracts | — | | | — | | | — | | | — | | | (7,066) | | | 0 | | | (7,066) | | | (782) | | Amortization of interest rate contracts | | Amortization of interest rate contracts | — | | | — | | | — | | | — | | | 5,511 | | | 576 | | | 6,087 | | | 610 | | Contributions from noncontrolling interests in property partnerships | | Contributions from noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | 8,219 | | | 8,219 | | | — | | Distributions to noncontrolling interests in property partnerships | | Distributions to noncontrolling interests in property partnerships | — | | | — | | | — | | | — | | | — | | | (58,811) | | | (58,811) | | | — | | Equity, December 31, 2020 | | Equity, December 31, 2020 | 1,731 | | | 153,988 | | | $ | 4,554,639 | | | $ | 193,623 | | | $ | (49,890) | | | $ | 1,726,933 | | | $ | 6,425,305 | | | $ | 1,643,024 | | |
The accompanying notes are an integral part of these consolidated financial statements.
| | | | | | | | | | | | | | | | | | BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | | Year ended December 31, | | 2020 | | 2019 | | 2018 | Cash flows from operating activities: | | | | | | Net income | $ | 1,038,739 | | | $ | 661,722 | | | $ | 730,312 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | Depreciation and amortization | 676,666 | | | 669,956 | | | 637,891 | | Amortization of right of use assets - operating leases | 2,234 | | | 2,412 | | | 0 | | Impairment losses | 0 | | | 22,272 | | | 10,181 | | Non-cash compensation expense | 44,142 | | | 40,958 | | | 40,117 | | Loss (income) from unconsolidated joint ventures | 85,110 | | | (46,592) | | | (2,222) | | Distributions of net cash flow from operations of unconsolidated joint ventures | 31,892 | | | 17,155 | | | 6,703 | | (Gains) losses from investments in securities | (5,261) | | | (6,417) | | | 1,865 | | Allowance for current expected credit losses | 1,849 | | | 0 | | | 0 | | Non-cash portion of interest expense | 23,384 | | | 22,254 | | | 21,303 | | Settlement of accreted debt discount on redemption of unsecured senior notes | 0 | | | (763) | | | (483) | | Losses from early extinguishments of debt | 0 | | | 29,540 | | | 16,490 | | Gains on sales of real estate | (631,945) | | | (858) | | | (190,716) | | Change in assets and liabilities: | | | | | | Tenant and other receivables, net | 22,550 | | | (24,876) | | | 29,204 | | Notes receivable, net | (19) | | | 4 | | | (13) | | Accrued rental income, net | (97,099) | | | (56,817) | | | (43,662) | | Prepaid expenses and other assets | 12,488 | | | 2,965 | | | 12,472 | | Lease liabilities - finance leases | 568 | | | 0 | | | 0 | | Lease liabilities - operating leases | 1,533 | | | 1,616 | | | 0 | | Accounts payable and accrued expenses | (4,059) | | | 12,627 | | | 1,353 | | Accrued interest payable | 16,211 | | | 858 | | | 5,237 | | Other liabilities | 17,629 | | | (49,569) | | | 4,955 | | Tenant leasing costs | (79,772) | | | (117,282) | | | (130,742) | | Total adjustments | 118,101 | | | 519,443 | | | 419,933 | | Net cash provided by operating activities | 1,156,840 | | | 1,181,165 | | | 1,150,245 | | Cash flows from investing activities: | | | | | | Acquisitions of real estate | (137,976) | | | (149,031) | | | 0 | | Construction in progress | (482,507) | | | (546,060) | | | (694,791) | | Building and other capital improvements | (160,126) | | | (180,556) | | | (189,771) | | Tenant improvements | (234,423) | | | (251,831) | | | (210,034) | | Right of use assets - finance leases | 0 | | | (5,152) | | | 0 | | Proceeds from sales of real estate | 519,303 | | | 90,824 | | | 455,409 | | Capital contributions to unconsolidated joint ventures | (172,436) | | | (87,392) | | | (345,717) | | Capital distributions from unconsolidated joint ventures | 55,298 | | | 136,807 | | | 0 | | Cash and cash equivalents deconsolidated | 0 | | | (24,112) | | | 0 | | Deposit on capital lease | 0 | | | 0 | | | (13,615) | | Issuance of related party note receivable | 0 | | | 0 | | | (80,000) | |
BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | | | | | | | | | For the year ended December 31, | | 2017 | | 2016 | | 2015 | | (in thousands) | Cash flows from operating activities: | | | | | | Net income | $ | 571,198 |
| | $ | 583,773 |
| | $ | 809,109 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | Depreciation and amortization | 609,407 |
| | 682,776 |
| | 631,549 |
| Impairment loss | — |
| | 1,783 |
| | — |
| Non-cash compensation expense | 35,361 |
| | 32,911 |
| | 29,183 |
| Income from unconsolidated joint ventures | (11,232 | ) | | (8,074 | ) | | (22,770 | ) | Gain on sale of investment in unconsolidated joint venture | — |
| | (59,370 | ) | | — |
| Distributions of net cash flow from operations of unconsolidated joint ventures | 26,858 |
| | 24,955 |
| | 8,469 |
| (Gains) losses from investments in securities | (3,678 | ) | | (2,273 | ) | | 653 |
| Non-cash portion of interest expense | (1,284 | ) | | (35,052 | ) | | (42,271 | ) | Settlement of accreted debt discount on redemption of unsecured senior notes | (1,980 | ) | | — |
| | — |
| (Gains) losses from early extinguishments of debt | (13,280 | ) | | 371 |
| | 21,837 |
| Gains on sales of real estate | (8,240 | ) | | (82,775 | ) | | (377,093 | ) | Change in assets and liabilities: | | | | | | Cash held in escrows | 8,194 |
| | 2,277 |
| | (18,284 | ) | Tenant and other receivables, net | 2,433 |
| | 3,688 |
| | (46,326 | ) | Accrued rental income, net | (58,355 | ) | | (28,127 | ) | | (73,911 | ) | Prepaid expenses and other assets | 51,425 |
| | 52,923 |
| | (16,877 | ) | Accounts payable and accrued expenses | 10,482 |
| | 15,666 |
| | (6,310 | ) | Accrued interest payable | (160,521 | ) | | 53,547 |
| | 26,854 |
| Other liabilities | (44,914 | ) | | (106,022 | ) | | (34,005 | ) | Tenant leasing costs | (104,429 | ) | | (96,103 | ) | | (90,396 | ) | Total adjustments | 336,247 |
| | 453,101 |
| | (9,698 | ) | Net cash provided by operating activities | 907,445 |
| | 1,036,874 |
| | 799,411 |
| Cash flows from investing activities: | | | | | | Acquisitions of real estate | (15,953 | ) | | (78,000 | ) | | — |
| Construction in progress | (608,404 | ) | | (500,350 | ) | | (374,664 | ) | Building and other capital improvements | (222,482 | ) | | (150,640 | ) | | (112,755 | ) | Tenant improvements | (205,331 | ) | | (230,298 | ) | | (144,572 | ) | Proceeds from sales of real estate | 29,810 |
| | 122,750 |
| | 602,600 |
| Proceeds from sales of real estate placed in escrow | (29,810 | ) | | (122,647 | ) | | (200,612 | ) | Proceeds from sales of real estate released from escrow | 29,810 |
| | 122,647 |
| | 634,165 |
| Cash placed in escrow for land sale contracts | — |
| | — |
| | (7,111 | ) | Cash released from escrow for land sale contracts | — |
| | 1,596 |
| | 5,312 |
| Cash released from escrow for investing activities | 9,230 |
| | 6,694 |
| | — |
| Cash placed in escrow for investment in unconsolidated joint venture | (25,000 | ) | | — |
| | — |
| Capital contributions to unconsolidated joint ventures | (109,015 | ) | | (575,795 | ) | | (38,207 | ) | Capital distributions from unconsolidated joint ventures | 251,000 |
| | 20,440 |
| | 24,527 |
| Proceeds from sale of investment in unconsolidated joint venture | — |
| | 55,707 |
| | — |
| Investments in marketable securities | — |
| | — |
| | (667,335 | ) | Investments in securities, net | (1,669 | ) | | (1,161 | ) | | (1,574 | ) | Net cash used in investing activities | (897,814 | ) | | (1,329,057 | ) | | (280,226 | ) | | | | | | |
| | | | | | | | | | | | | | | | | | BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | | Year ended December 31, | | 2020 | | 2019 | | 2018 | Issuance of notes receivable, net | (9,800) | | | 0 | | | (19,455) | | Proceeds from notes receivable | 6,397 | | | 3,544 | | | 0 | | Investments in securities, net | 2,551 | | | (2,132) | | | (902) | | Net cash used in investing activities | (613,719) | | | (1,015,091) | | | (1,098,876) | | | | | | | | Cash flows from financing activities: | | | | | | Repayments of mortgage notes payable | (17,168) | | | (46,173) | | | (18,634) | | Proceeds from unsecured senior notes | 1,248,125 | | | 1,548,106 | | | 996,410 | | Redemption of unsecured senior notes | 0 | | | (699,237) | | | (699,517) | | Borrowings on unsecured line of credit | 265,000 | | | 380,000 | | | 745,000 | | Repayments of unsecured line of credit | (265,000) | | | (380,000) | | | (790,000) | | Proceeds from unsecured term loan | 0 | | | 0 | | | 500,000 | | Payments on finance lease obligations | 0 | | | (502) | | | — | | Payments on capital lease obligations | — | | | — | | | (1,353) | | Payments on real estate financing transactions | 0 | | | 0 | | | (960) | | Deferred financing costs | (10,416) | | | (13,213) | | | (8,362) | | Debt prepayment and extinguishment costs | 0 | | | (28,716) | | | (15,973) | | Net proceeds from equity transactions | 3,277 | | | 13,710 | | | (730) | | Distributions | (688,904) | | | (666,294) | | | (587,628) | | Contributions from noncontrolling interests in property partnerships | 8,219 | | | 35,816 | | | 46,701 | | Distributions to noncontrolling interests in property partnerships | (58,811) | | | (69,913) | | | (82,501) | | Acquisition of noncontrolling interest in property partnership | 0 | | | (186,963) | | | 0 | | Net cash provided by (used in) financing activities | 484,322 | | | (113,379) | | | 82,453 | | Net increase in cash and cash equivalents and cash held in escrows | 1,027,443 | | | 52,695 | | | 133,822 | | Cash and cash equivalents and cash held in escrows, beginning of period | 691,886 | | | 639,191 | | | 505,369 | | Cash and cash equivalents and cash held in escrows, end of period | $ | 1,719,329 | | | $ | 691,886 | | | $ | 639,191 | | | | | | | | Reconciliation of cash and cash equivalents and cash held in escrows: | | | | | | Cash and cash equivalents, beginning of period | $ | 644,950 | | | $ | 543,359 | | | $ | 434,767 | | Cash held in escrows, beginning of period | 46,936 | | | 95,832 | | | 70,602 | | Cash and cash equivalents and cash held in escrows, beginning of period | $ | 691,886 | | | $ | 639,191 | | | $ | 505,369 | | | | | | | | Cash and cash equivalents, end of period | $ | 1,668,742 | | | $ | 644,950 | | | $ | 543,359 | | Cash held in escrows, end of period | 50,587 | | | 46,936 | | | 95,832 | | Cash and cash equivalents and cash held in escrows, end of period | $ | 1,719,329 | | | $ | 691,886 | | | $ | 639,191 | | | | | | | | Supplemental disclosures: | | | | | | Cash paid for interest | $ | 433,492 | | | $ | 439,059 | | | $ | 416,019 | | Interest capitalized | $ | 53,881 | | | $ | 54,911 | | | $ | 65,766 | | | | | | | | Non-cash investing and financing activities: | | | | | | Write-off of fully depreciated real estate | $ | (99,494) | | | $ | (129,253) | | | $ | (135,431) | | Change in real estate included in accounts payable and accrued expenses | $ | (19,848) | | | $ | 89,245 | | | $ | (44,866) | | Real estate acquired through capital lease | $ | 0 | | | $ | 0 | | | $ | 12,397 | | Right of use assets obtained in exchange for lease liabilities | $ | 0 | | | $ | 287,540 | | | $ | 0 | |
BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | | | | | | | | | For the year ended December 31, | | 2017 | | 2016 | | 2015 | | (in thousands) | Cash flows from financing activities: | | | | | | Proceeds from mortgage notes payable | 2,300,000 |
| | — |
| | — |
| Repayments of mortgage notes payable | (1,317,653 | ) | | (1,326,865 | ) | | (54,801 | ) | Proceeds from unsecured senior notes | 847,935 |
| | 1,989,790 |
| | — |
| Redemption/repurchase of unsecured senior notes | (848,020 | ) | | — |
| | — |
| Borrowings on unsecured line of credit | 580,000 |
| | 25,000 |
| | — |
| Repayments of unsecured line of credit | (535,000 | ) | | (25,000 | ) | | — |
| Repayments of mezzanine notes payable | (306,000 | ) | | — |
| | — |
| Repayments of outside members’ notes payable | (70,424 | ) | | — |
| | — |
| Payments on capital lease obligations | (401 | ) | | (745 | ) | | (356 | ) | Proceeds from real estate financing transaction | — |
| | — |
| | 6,000 |
| Payments on real estate financing transactions | (2,840 | ) | | (5,260 | ) | | (3,103 | ) | Deposit on mortgage note payable interest rate lock | (23,200 | ) | | — |
| | — |
| Return of deposit on mortgage note payable interest rate lock | 23,200 |
| | — |
| | — |
| Deferred financing costs | (50,705 | ) | | (16,121 | ) | | (1,510 | ) | Net proceeds from equity transactions | 241 |
| | (271 | ) | | 799 |
| Redemption of preferred units | — |
| | — |
| | (633 | ) | Distributions | (526,578 | ) | | (671,626 | ) | | (1,226,199 | ) | Contributions from noncontrolling interests in property partnerships | 52,009 |
| | 11,951 |
| | 2,705 |
| Acquisition of noncontrolling interest in property partnership | — |
| | — |
| | (108,499 | ) | Distributions to noncontrolling interests in property partnerships | (54,342 | ) | | (55,474 | ) | | (172,949 | ) | Net cash provided by (used in) financing activities | 68,222 |
| | (74,621 | ) | | (1,558,546 | ) | Net increase (decrease) in cash and cash equivalents | 77,853 |
| | (366,804 | ) | | (1,039,361 | ) | Cash and cash equivalents, beginning of year | 356,914 |
| | 723,718 |
| | 1,763,079 |
| Cash and cash equivalents, end of year | $ | 434,767 |
| | $ | 356,914 |
| | $ | 723,718 |
| Supplemental disclosures: | | | | | | Cash paid for interest | $ | 598,486 |
| | $ | 433,591 |
| | $ | 481,826 |
| Interest capitalized | $ | 61,070 |
| | $ | 39,237 |
| | $ | 34,213 |
| Non-cash investing and financing activities: | | | | | | Write-off of fully depreciated real estate | $ | (123,714 | ) | | $ | (202,388 | ) | | $ | (45,455 | ) | Change in real estate included in accounts payable and accrued expenses | $ | 27,978 |
| | $ | (1,481 | ) | | $ | 74,985 |
| Real estate acquired through capital lease | $ | 28,962 |
| | $ | 21,000 |
| | $ | — |
| Outside members’ notes payable contributed to noncontrolling interests in property partnerships | $ | 109,576 |
| | $ | — |
| | $ | — |
| Marketable securities transferred in connection with the legal defeasance of mortgage note payable | $ | — |
| | $ | — |
| | $ | 667,335 |
| Mortgage note payable legally defeased | $ | — |
| | $ | — |
| | $ | 640,500 |
| Mortgage note payable assigned in connection with the sale of real estate | $ | — |
| | $ | — |
| | $ | 116,993 |
| Distributions declared but not paid | $ | 139,040 |
| | $ | 130,308 |
| | $ | 327,320 |
| Conversions of redeemable partnership units to partners’ capital | $ | 16,916 |
| | $ | 6,461 |
| | $ | 14,343 |
| Issuance of restricted securities to employees and directors | $ | 35,989 |
| | $ | 33,615 |
| | $ | 43,355 |
|
| | | | | | | | | | | | | | | | | | BOSTON PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | | Year ended December 31, | | 2020 | | 2019 | | 2018 | Prepaid rent reclassified to right of use asset | $ | 0 | | | $ | 15,000 | | | $ | 0 | | Accrued rental income, net deconsolidated | $ | (4,558) | | | $ | 0 | | | $ | 0 | | Tenant leasing costs, net deconsolidated | $ | (3,462) | | | $ | 0 | | | $ | 0 | | Building and other capital improvements, net deconsolidated | $ | (111,889) | | | $ | (12,767) | | | $ | 0 | | Tenant improvements, net deconsolidated | $ | (12,331) | | | $ | 0 | | | $ | 0 | | Right of use asset - finance lease deconsolidated | $ | 0 | | | $ | (135,004) | | | $ | 0 | | Lease liability - finance lease deconsolidated | $ | 0 | | | $ | 119,534 | | | $ | 0 | | Investment in unconsolidated joint venture recorded upon deconsolidation | $ | 347,898 | | | $ | 29,246 | | | $ | 0 | | Distributions declared but not paid | $ | 171,082 | | | $ | 170,713 | | | $ | 165,114 | | Conversions of redeemable partnership units to partners’ capital | $ | 29,698 | | | $ | 4,885 | | | $ | 2,880 | | Issuance of restricted securities to employees and non-employee directors | $ | 42,607 | | | $ | 37,622 | | | $ | 37,052 | |
The accompanying notes are an integral part of these consolidated financial statements.
BOSTON PROPERTIES, INC. AND BOSTON PROPERTIES LIMITED PARTNERSHIP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Organization Boston Properties, Inc., a Delaware corporation, is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”). Boston Properties, Inc. is the sole general partner of Boston Properties Limited Partnership, its operating partnership, and at December 31, 20172020 owned an approximate 89.7% (89.5%90.0% (89.6% at December 31, 2016)2019) general and limited partnership interest in Boston Properties Limited Partnership. Unless stated otherwise or the context requires, the “Company” refers to Boston Properties, Inc. and its subsidiaries, including Boston Properties Limited Partnership and its consolidated subsidiaries. Partnership interests in Boston Properties Limited Partnership include: •common units of partnership interest (also referred to as “OP Units”), •long term incentive units of partnership interest (also referred to as “LTIP Units”), and •preferred units of partnership interest (also referred to as “Preferred Units”). Unless specifically noted otherwise, all references to OP Units exclude units held by Boston Properties, Inc. A holder of an OP Unit may present such OP Unit to Boston Properties Limited Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such redemption right for a period of time, generally one1 year from issuance). Upon presentation of an OP Unit for redemption, Boston Properties Limited Partnership is obligated to redeem suchthe OP Unit for cash equal to the value of a share of common stock of Boston Properties, Inc. (“Common Stock”) at such time.. In lieu of a cash redemption, Boston Properties, Inc. may elect to acquire the OP Unit for one1 share of Common Stock. Because the number of shares of Common Stock outstanding at all times equals the number of OP Units that Boston Properties, Inc. owns, one1 share of Common Stock is generally the economic equivalent of one1 OP Unit, and the quarterly distribution that may be paid to the holder of an OP Unit equals the quarterly dividend that may be paid to the holder of a share of Common Stock. The Company uses LTIP Units as a form of equity-based award for annual long-termlong term incentive equity compensation. The Company has also issued LTIP Units to employees in the form of (1) 2012 outperformance plan awards (“2012 OPP Units”) and (2) 2013 2014, 2015, 2016 and 2017- 2020 multi-year, long-term incentive program awards (also referred to as “MYLTIP Units”), each of which, upon the satisfaction of certain performance and vesting conditions, is convertible into one OP Unit. The three-year measurement periods for the 2012 OPP Units and the 2013 - 2017 MYLTIP Units and 2014 MYLTIP Units expired on February 6, 2015, February 4, 2016 and February 3, 2017, respectively,have ended and Boston Properties, Inc.’s total stockholder return (“TSR”) was sufficient for employees to earn and therefore become eligible to vest in a portion of the awards. Unless and until they are earned, the rights, preferences and privileges of the 2015, 2016 and 20172018 - 2020 MYLTIP Units differ from other LTIP Units granted to employees (including the 2012 OPP Units and the 2013 MYLTIP Units and the 2014- 2017 MYLTIP Units, which have been earned). Therefore, unless specifically noted otherwise, all references to LTIP Units exclude the 2015, 2016 and 20172018 - 2020 MYLTIP Units. LTIP Units (including the earned 2012 OPP Units the 2013 MYLTIP Units and the 2014earned 2013 - 2017 MYLTIP Units), whether vested or not, will receive the same quarterly per unit distributions as OP Units, which equal per share dividends on Common Stock (See Notes 11, 1716 and 20)18). At December 31, 2017,2020 and 2019, there was one1 series of Preferred Units outstanding (i.e., Series B Preferred Units). The Series B Preferred Units were issued to Boston Properties, Inc. on March 27, 2013 in connection with the issuance of 80,000 shares (8,000,000 depositary shares each representing 1/100th of a share) of 5.25% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”). Boston Properties, Inc. contributed the net proceeds from the offering to Boston Properties Limited Partnership in exchange for 80,000 Series B Preferred Units having terms and preferences generally mirroring those of the Series B Preferred Stock (See Note 12). Properties At December 31, 2017,2020, the Company owned or had joint venture interests in a portfolio of 179196 commercial real estate properties (the “Properties”) aggregating approximately 50.351.2 million net rentable square feet (unaudited) of primarily Class A office properties, including twelve6 properties under construction/redevelopment totaling approximately 6.23.7 million net rentable square feet.feet (unaudited). At December 31, 2017,2020, the Properties consisted of:
167•177 office properties (including eight6 properties under construction/redevelopment);
six residential properties (including four properties under construction);
five•12 retail properties;
•6 residential properties; and
•1 hotel. The Company considers Class A office properties to be well locatedwell-located buildings that are professionally managed and maintained, attract high-quality tenants and command upper-tier rental rates, and that are modern structures or have been modernized to compete with newer buildings.buildings and professionally managed and maintained. As such, these properties attract high-quality tenants and command upper-tier rental rates. Basis of Presentation The accompanying consolidated financial statements are presented using the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. Boston Properties, Inc. does not have any other significant assets, liabilities or operations, other than its investment in Boston Properties Limited Partnership, nor does it have employees of its own. Boston Properties Limited Partnership, not Boston Properties, Inc., generally executes all significant business relationships other than transactions involving securities of Boston Properties, Inc. All majority-owned subsidiaries and joint ventures over which the Company has financial and operating control and variable interest entities (“VIEs”) in which the Company has determined it is the primary beneficiary are included in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation. The Company accounts for all other unconsolidated joint ventures using the equity method of accounting. Accordingly, the Company’s share of the earnings of these joint ventures and companies is included in consolidated net income. Variable Interest Entities (VIEs) On January 1, 2016, the Company adopted Accounting Standards Update (“ASU”) ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”). ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 (1) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (2) eliminates the presumption that a general partner should consolidate a limited partnership and (3) affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The Company reviewed all of its legal entities in accordance with ASU 2015-02 and concluded that certain of its legal entities, including Boston Properties Limited Partnership, which had been consolidated in accordance with the voting interest model, are now variable interest entities under the VIE model, as discussed below. The adoption of the guidance did not alter any of the Company’s consolidation conclusions, but resulted in additional disclosures.
Consolidated VIEs are those wherefor which the Company is considered to be the primary beneficiary of a VIE. The primary beneficiary is the entity that has a controlling financial interest in the VIE, which is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance and (2) the obligation to absorb losses or the right to receive the returns from the VIE that could potentially be significant to the VIE. The Company has determined that it is the primary beneficiary for seven6 of the nine7 entities that are VIEs.VIEs as of December 31, 2020. Consolidated Variable Interest Entities As of December 31, 2017,2020, Boston Properties, Inc. has identified sevensix consolidated VIEs, including Boston Properties Limited Partnership. Excluding Boston Properties Limited Partnership, the VIEs are (1)consisted of the following five5 in-service properties: 767 Fifth Avenue (the General Motors Building), TimeTimes Square Tower, 601 Lexington Avenue, Atlantic Wharf Office Building and 100 Federal Street and (2) the entity that owns Salesforce Tower, which was partially placed in-service on December 1, 2017.Street. The Company consolidates these VIEs because it is the primary beneficiary. The third parties’ interests in these consolidated entities with the exception of(excluding Boston Properties Limited Partnership,Partnership’s interest) are reflected as noncontrolling interests in property partnerships in the accompanying Consolidated Financial Statementsconsolidated financial statements (See Note 11). In addition, Boston Properties, Inc.’s only significant asset is its investment in Boston Properties Limited Partnership and, consequently, substantially all of Boston Properties, Inc.’s assets and liabilities are the assets and liabilities of Boston Properties Limited Partnership. Variable Interest Entities Not Consolidated TheAs of December 31, 2020, the Company has determined that its 7750 Wisconsin Avenue LLC and Residential Tower Developer LLCthe Platform 16 Holdings LP joint ventures, which own 7750 Wisconsin Avenue and The Hub on Causeway - Residential, respectively, are VIEs.
venture is a VIE. The Company does not consolidate these entitiesthis entity as the Company does not have the power to direct the activities that, when taken together, most significantly impact the VIE’s performance and, therefore, the Company is not considered to be the primary beneficiary. 2. Summary of Significant Accounting Policies Real Estate Upon acquisitions of real estate, which includes the consolidationCompany assesses whether the transaction should be accounted for as an asset acquisition or as a business combination by applying a screen to determine whether the integrated set of previously unconsolidated joint ventures,assets and activities acquired meets the definition of a business. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. The Company’s acquisitions of real estate or in-substance real estate generally will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets
(i.e. land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. The Company assesses the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-” and “below-market” leases, leasing and assumed financing origination costs, acquired in-place leases, other identified intangible assets and assumed liabilities) and allocates the purchase price to the acquired assets and assumed liabilities, including land and buildings as if vacant. The Company assesses and considers fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that it deems appropriate, as well as available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends, and market and economic conditions. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including (but not limited to) the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals. Based on its acquisitions to date, the Company’s allocation to customer relationship intangible assets has been immaterial. The Company records acquired “above-” and “below-market” leases at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. Acquired “above-” and “below-market” lease values have been reflected within Prepaid Expenses and Other Assets and Other Liabilities, respectively, in the Company’s Consolidated Balance Sheets. Other intangible assets acquired include amounts for in-place lease values that are based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses. Management reviews its long-lived assets for impairmentindicators of impairment following the end of each quarter and when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. This evaluation of long-lived assets is dependent on a number of factors, including when there is an event or adverse change in circumstancesthe operating performance of the long-lived asset or a current expectation that, indicates an impairment in value.more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life or hold period. An impairment loss is recognized if the carrying amount of an asset is not recoverable and exceeds its fair value. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding anticipated hold period,periods, future occupancy, future rental rates, andfuture capital requirements, discount rates and capitalization rates that could differ materially from actual results in future periods. Because cash flows on properties considered to be “long-lived assets to be held and used” are considered on an undiscounted basis to determine whether an asset has beenmay be impaired, the Company’s established strategy of holding properties over the long term directly decreases the likelihood of recording an impairment loss. If the Company’s hold strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value, less cost to sell.value. Guidance in Accounting Standards Codification (“ASC”) 360 “Property Plant and Equipment” (“ASC 360”) requires that qualifying assets and liabilities and the results of operations that have been sold, or otherwise qualify as “held for sale,” be presented as discontinued operations in all periods presented if the property operations are expected to be eliminated and the Company will not have significant continuing involvement following the sale. Discontinued operations presentation applies only to disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results (e.g., a disposal of a major geographical area, a major line of business, a major equity method investment or other major parts of an entity). The components of the property’s net income that are reflected as discontinued operations include the net gain (or loss) upon the disposition of the property held for sale, operating results, depreciation and interest expense (if the property is subject to a secured
loan). The Company generally considers assets to be “held for sale” when the transaction has been approved by Boston Properties, Inc.’s Board of Directors, or a committee thereof, and there are no known significant contingencies relating to the sale, such that a sale of the property within one year is considered probable. Following the classification of a property as “held for
sale,” no further depreciation is recorded on the assets, and the asset is written down to the lower of carrying value or fair market value, less cost to sell. Real estate is stated at depreciated cost. A variety of costs are incurred in the acquisition, development and leasing of properties. The cost of buildings and improvements includes the purchase price of property, legal fees and other acquisition costs. The Company capitalizes acquisition costs that it incurs to effect an asset acquisition and expenses acquisition costs that it incurs to effect a business combination, including legal, due diligence and other closing related costs. Costs directly related to the development of properties are capitalized. Capitalized development costs include interest, internal wages, property taxes, insurance, and other project costs incurred during the period of development. After the determination is made to capitalize a cost, it is allocated to the specific component of athe project that is benefited.benefited from the investment. Determination of when a development project commences and capitalization begins, and when a development project is substantially complete and held available for occupancy and capitalization must cease, involves a degree of judgment. The Company’s capitalization policy on development properties follows the guidance in ASC 835-20 “Capitalization of Interest” and ASC 970 “Real Estate-General.” The costs of land and buildings under development include specifically identifiable costs. The capitalizedCapitalized costs include pre-construction costs necessary to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. The Company begins the capitalization of costs during the pre-construction period, which it defines as activities that are necessary for the development of the property. The Company considers a construction project as substantially completedcomplete and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity. The Company ceases capitalization on the portion (1) substantially completed, (2) occupied or held available for occupancy, and capitalizes only those costs associated with the portion under construction or (3) if activities necessary for the development of the property have been suspended. Interest costs capitalized for the years ended December 31, 2017, 20162020, 2019 and 20152018 were $61.1approximately $53.9 million, $39.2$54.9 million and $34.2$65.8 million, respectively. Salaries and related costs capitalized for the years ended December 31, 2017, 20162020, 2019 and 20152018 were $13.2approximately $12.9 million, $11.1$10.4 million and $10.4$12.5 million, respectively.
Expenditures for repairs and maintenance are charged to operations as incurred. Significant betterments are capitalized. When assets are sold or retired, their costs and related accumulated depreciation are removed from the accounts with the resulting gains or losses reflected in net income or loss for the period. The Company computes depreciation and amortization on properties using the straight-line method based on estimated useful asset lives. In accordance with ASC 805 “Business Combinations,” theThe Company allocates the acquisition cost of real estate to its components and depreciates or amortizes these assets (or liabilities) over their useful lives. The amortization of acquired “above-” and “below-market” leases and acquired in-place leases is recorded as an adjustment to revenue and depreciation and amortization, respectively, in the Consolidated Statements of Operations. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: | | | | | | | | | | | | Land improvements | | 25 to 40 years | Buildings and improvements | | 10 to 40 years | Tenant improvements | | Shorter of useful life or terms of related lease | Furniture, fixtures, and equipment | | 3 to 7 years |
Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and investments with maturities of three months or less from the date of purchase. The majority of the Company’s cash and cash equivalents are held at major commercial banks which may at times exceed the Federal Deposit Insurance Corporation limit of $250,000. Cash Held in Escrows Escrows include amounts established pursuant to various agreements for security deposits, property taxes, insurance and other costs. Escrows also include cash held by qualified intermediaries for possible investments in
like-kind exchanges in accordance with Section 1031 of the Internal Revenue Code, as amended (the “Code”), in connection with sales of the Company’s properties.
Investments in Securities The Company accounts for investments in tradingequity securities at fair value, with gains or losses resulting from changes in fair value recognized currently in earnings. The designation of trading securities is generally determined at acquisition. The Company maintains a deferred compensation planplans that isare designed to allow officers and non-employee directors of Boston Properties, Inc. to defer a portion of theirthe officer’s current income or the non-employee director’s current compensation on a pre-tax basis and receive a tax-deferred return on these deferrals.deferrals based on the performance of specific investments selected by the officer or non-employee director. The Company’s obligation under the planplans is that of an unsecured promise to pay the deferred compensation to the plan participants in the future. At December 31, 20172020 and 2016,2019, the Company had maintained approximately $29.2$39.5 million and $23.8$36.7 million, respectively, in a separate account,accounts, which isare not restricted as to itstheir use. The Company recognized gains (losses) of approximately $3.7$5.3 million, $2.3$6.4 million and $(0.7)$(1.9) million on its investments in the accountaccounts associated with the Company’s deferred compensation planplans during the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. Tenant and Other Receivables Tenant and other accounts receivable, other than accrued rents receivable, are expected to be collected within one year. Notes Receivable The Company accounts for notes receivable at their unamortized cost, net of any unamortized deferred fees or costs, premiums or discounts and an allowance for loan losses (see “New Accounting Pronouncements Adopted—Financial Instruments - Credit Losses”). Loan fees and direct costs associated with loans originated by the Company are deferred and amortized over the term of the note as interest income. Deferred Charges Deferred charges include leasing costs and certain financing fees. Leasing costs include acquired intangible in-place lease values and direct and incremental fees and costs incurred in the successful negotiation of leases, including brokerage legal, internal leasing employee salaries and other costs which have been deferred and are being amortized on a straight-line basis over the terms of the respective leases. Unamortized leasing costs are charged to expense upon the early termination of the lease. Fully amortized deferred leasing costs are removed from the books upon the expiration of the lease. The Company did not capitalize any external legal costs and internal leasing salaries and related costs for the years ended December 31, 2020 and 2019 (see “Leases”). Internal leasing salaries and related costs capitalized for the yearsyear ended December 31, 2017, 2016 and 20152018 were $5.0 million, $7.2 million and $5.5 million, respectively.approximately $5.4 million. Financing fees included in deferred charges consist of external fees and costs incurred to obtain the Company'sCompany’s revolving facility and if applicable, the delayed draw facility and construction financing arrangements where there are not sufficient amounts outstanding. Such financing costs have been deferred and are being amortized over the terms of the respective financing and included within interest expense. Unamortized financing costs are charged to expense upon the early repayment or significant modification of the financing. Fully amortized deferred financing costs are removed from the books upon the maturity of the debt. External fees and costs incurred to obtain mortgage financings and unsecured senior notes have been deferred and are presented as direct deductions from the carrying amounts of the corresponding debt liability. Such financing costs are being amortized over the terms of the respective financing and included within interest expense. Unamortized financing costs are charged to expense upon the early repayment or significant modification of the financing. Investments in Unconsolidated Joint Ventures The Company consolidates VIEs in which it is considered to be the primary beneficiary. VIEs are entities in which the equity investors do not have sufficient equity at risk to finance their endeavors without additional financial support or that the holders of the equity investment at risk do not have substantive participating rights. The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the variable interest entity’s performance, and (2) the obligation to absorb losses and the right to receive the returns from the variable interest entity that could potentially be significant to the VIE. For ventures that are not VIEs, the Company consolidates entities for which it has significant
decision making control over the ventures’ operations. The Company’s judgment with respect to its level of influence or control of an entity involves the consideration of various factors including the form of the Company’s ownership interest, its representation in the entity’s governance, the size of its investment (including loans), estimates of future cash flows, its ability to participate in policy making decisions and the rights of the other investors to participate in the decision making process and to replace the Company as manager and/or liquidate the venture, if applicable. The Company’s assessment of its influence or control over an entity affects the presentation of these investments in the Company’s consolidated financial statements. In addition to evaluating control rights, the Company consolidates entities in which the outside partner has no substantive kick-out rights to remove the Company as the managing member.
Accounts of the consolidated entity are included in the accounts of the Company and the noncontrolling interest is reflected on the Consolidated Balance Sheets as a component of equity or in temporary equity between liabilities and equity. Investments in unconsolidated joint ventures are recorded initially at cost, and subsequently adjusted for equity in earnings and cash contributions and distributions. Any difference between the carrying amount of these investments on the balance sheet and the underlying equity in net assets is amortized as an adjustment to equity in earnings of unconsolidated joint ventures over the life of the related asset. Under the equity method of accounting, the net equity investment of the Company is reflected within the Consolidated Balance Sheets, and the Company’s share of net income or loss from the joint ventures is included within the Consolidated Statements of Operations. The joint venture agreements may designate different percentage allocations among investors for profits and losses; however, the Company’s recognition of joint venture income or loss generally follows the joint venture’s distribution priorities, which may change upon the achievement of certain investment return thresholds. The Company may account for cash distributions in excess of its investment in an unconsolidated joint venture as income when the Company is not the general partner in a limited partnership and when the Company has neither the requirement nor the intent to provide financial support to the joint venture. The Company classifies distributions received from equity method investees within its Consolidated Statements of Cash Flows using the nature of the distribution approach, which classifies the distributions received on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities). The Company’s investments in unconsolidated joint ventures are reviewed for indicators of impairment periodicallyon a quarterly basis and the Company records impairment charges when events or circumstances change indicating that a decline in the fair values below the carrying valuesamounts has occurred and such decline is other-than-temporary. The ultimate realizationThis evaluation of the investmentinvestments in unconsolidated joint ventures is dependent on a number of factors, including the performance of each investment and market conditions. The Company will record an impairment charge if it determines that a decline in the fair value below the carrying valueamount of an investment in an unconsolidated joint venture is other-than-temporary. The fair value is calculated using discounted cash flows which is subjective and considers assumptions regarding future occupancy, future rental rates, future capital requirements, discount rates and capitalization rates that could differ materially from actual results in future periods. To the extent that the Company contributescontributed assets to a joint venture, the Company’s investment in the joint venture iswas recorded at the Company’s cost basis in the assets that were contributed to the joint venture. To the extent that the Company’s cost basis is different than the basis reflected at the joint venture level, the basis difference is amortized over the life of the related asset and included in the Company’s share of equity in net income of the joint venture. In accordance with the provisions of ASC 970-323 “Investments—Equity Method610-20 “Gains and Joint Ventures”Losses from the Derecognition of Nonfinancial Assets” (“ASC 970-323”610-20”), the Company will recognize gainsa full gain on both the contributionretained and sold portions of real estate contributed or sold to a joint ventures, relating solely to the outside partner’sventure by recognizing its new equity method investment interest to the extent the economic substance of the transaction is a sale.at fair value. The combined summarized financial information of the unconsolidated joint ventures is disclosed in Note 5.6. Revenue Recognition In general, the Company commences lease/rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. Contractual lease/rental revenue is reported on a straight-line basis over the terms of the respective leases. The impact of the straight-line rent adjustment increased revenue by approximately $54.8$104.9 million, $31.7$58.4 million and $80.0$51.9 million for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively, as the revenue recorded exceeded amounts billed. Accrued rental income, as reported on the Consolidated Balance Sheets, represents cumulative lease/rental income earned in excess of rent payments received pursuant to the terms of the individual lease agreements.
The Company maintains an allowance againstmust make estimates as to the collectability of its accrued rental income for future potentialrent and accounts receivable related to lease revenue. Management analyzes accrued rent and accounts receivable by considering tenant credit losses. The credit assessment is based oncreditworthiness, current economic trends, including the estimated accrued rental income that is recoverable over the termimpact of the lease.novel coronavirus (“COVID-19”) pandemic on tenants’ businesses, and changes in tenants’ payment patterns when evaluating the collectability of the tenant’s receivable balance, including the accrued rent receivable, on a lease-by-lease basis. The Company also maintains an allowancewrites-off the tenant’s receivable balance, including the accrued rent receivable, if the Company considers the balances no longer probable of collection. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected recovery of pre-petition and post-petition claims. If the balances are considered no longer probable of collection and therefore written off, the Company will cease to recognize lease income, including straight-line rent, unless cash is received (See Note 4). If the Company subsequently determines that it is probable it will collect substantially all the remaining lessee’s lease payments under the lease term, the Company will then reinstate the straight-line balance, adjusting for doubtful accounts for estimated losses resulting from the inability of tenantsamount related to make required rent payments. The computation of this allowance is based on the tenants’ payment history and current credit status, as well as certain industry or geographic specific credit considerations.period when the lease payments were considered not probable. If the Company’s estimates of collectability differ from the cash received, then the timing and amount of the Company’s reported revenue could be impacted. The credit risk is mitigated by the high quality of the Company’s existing tenant base, reviews of prospective tenants’ risk profiles prior to lease execution and consistent monitoring of the Company’s portfolio to identify potential problem tenants. In accordance with ASC 805, theThe Company recognizes acquired in-place “above-” and “below-market” leases at their fair values as rental revenue over the original term of the respective leases. The impact of the acquired in-place “above-” and “below-market” leases increased revenue by approximately $23.5$6.5 million, $30.2$20.9 million and $35.9$23.8 million for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. The following table summarizes the scheduled amortization of the Company’s acquired “above-” and “below-market” lease intangibles for each of the five succeeding years (in thousands).
| | | | | | | | | | | | | | | | | Acquired Above-Market Lease Intangibles | | Acquired Below-Market Lease Intangibles | 2021 | | $ | 3,019 | | | $ | 6,193 | | 2022 | | 354 | | | 5,437 | | 2023 | | 183 | | | 5,296 | | 2024 | | 135 | | | 3,780 | | 2025 | | 135 | | | 3,775 | |
| | | | | | | | | | | | Acquired Above-Market Lease Intangibles | | Acquired Below-Market Lease Intangibles | 2018 | | $ | 8,614 |
| | $ | 32,152 |
| 2019 | | 7,106 |
| | 27,281 |
| 2020 | | 5,394 |
| | 10,736 |
| 2021 | | 2,988 |
| | 6,399 |
| 2022 | | 315 |
| | 5,669 |
|
Recoveries from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes and other recoverable costs, are recognized as revenue in the period during which the expenses are incurred. Tenant reimbursements are recognized and presented in accordance with guidance in ASC 605-45 “Principal Agent Considerations” (“ASC 605-45”). ASC 605-45 requires that these reimbursements be recorded on a gross basis, as the Company is generally the primary obligor with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and has credit risk.incurred (See “Leases” ). The Company also receives reimbursementreimbursements of payroll and payroll related costs from unconsolidated joint venture entities and third partiesparty property owners in connection with management services contracts which the Company reflects on a gross basis instead of on a net basis.basis as the Company has determined that it is the principal and not the agent under these arrangements in accordance with the guidance in ASC 606 “Revenue from Contracts with Customers” (“ASC 606”). The Company’s parking revenues arerevenue is derived primarily from leases, monthly parking and transient daily parking. In addition, the Company has certain lease arrangements for parking accounted for under the guidance in ASC 842 “Leases” (“ASC 842”). The Company recognizesmonthly and transient daily parking revenue as earned.falls within the scope of ASC 606 and is accounted for at the point in time when control of the goods or services transfers to the customer and the Company’s performance obligation is satisfied. The Company’s hotel revenue is derived from room rentals and other sources such as charges to guests for telephone service, movie and vending commissions, meeting and banquet room revenue and laundry services. Hotel revenue is recognized as earned.the hotel rooms are occupied and the services are rendered to the hotel customers. The Company receivesearns management and development fees. Development and management services revenue is earned from unconsolidated joint venture entities and third-party property owners. The Company determined that the performance obligations associated with its development services contracts are satisfied over time and that the Company would recognize its development services revenue under the output method evenly over time from the development commencement date through the substantial completion date of the development management services project due to the stand-ready nature of the contracts. Significant judgments impacting the amount and timing of revenue recognized from the Company’s development services contracts include estimates of total development project costs from which the fees are typically derived and estimates of the period of time until substantial completion of the development project, the period of time over which the development services are
required to be performed. The Company recognizes development fees earned from unconsolidated joint venture projects equal to its cost plus profit to the extent of the third parties.party partners’ ownership interest. Property management fees are recorded and earned based on a percentage of collected rents at the properties under management, and not on a straight-line basis, because such fees are contingent upon the collection of rents. The Company records development fees as earned depending on the risk associated with each project. The Company recognizes development fees earned from joint venture projects equal to its cost plus profit to the extent of the third party partners’ ownership interest. Gains on sales of real estate are recognized pursuant to the provisions included in ASC 360-20 “Real Estate Sales”610-20. Under ASC 610-20, the Company must first determine whether the transaction is a sale to a customer or non-customer. The Company typically sells real estate on a selective basis and not within the ordinary course of its business and therefore expects that its sale transactions will not be contracts with customers. The Company next determines whether it has a controlling financial interest in the property after the sale, consistent with the consolidation model in ASC 810 “Consolidation” (“ASC 360-20”810”). The specific timingIf the Company determines that it does not have a controlling financial interest in the real estate, it evaluates whether a contract exists under ASC 606 and whether the buyer has obtained control of the sale is measured against various criteria in ASC 360-20 related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the properties. If the sales criteria for the full accrual method are not met, the Company defers some or all of the gain recognition and accounts for the continued operations of the property by applying the finance, leasing, profit sharing, deposit, installment or cost recovery methods, as appropriate, until the sales criteria are met. Ground Leases
The Company has non-cancelable ground lease obligations with various initial term expiration dates through 2114.asset that was sold. The Company recognizes a full gain on sale of real estate when the derecognition criteria under ASC 610-20 have been met.
Leases Lessee For leases in which the Company is the lessee (generally ground rent expenseleases), in accordance with ASC 842 the Company recognizes a right-of-use asset and a lease liability. The Company made the policy election to not apply the revenue recognition requirements of ASC 842 to short-term leases. This policy election is made by class of underlying assets and as described below, the Company considers real estate to be a class of underlying assets, and will not be further delineating it into specific uses of the real estate asset as the risk profiles are similar in nature. The Company will recognize the lease payments in net income on a straight-line basis over the termslease term. The lease liability is equal to the present value of the respective ground lease agreements. The future contractual minimum lease payments in accordance with ASC 842. The Company will use its incremental borrowing rate (“IBR”) to determine the net present value of the minimum lease payments. In order to determine the IBR, the Company utilized a market-based approach to estimate the incremental borrowing rate for each individual lease. The approach required significant judgment. Therefore, the Company utilized different data sets to estimate base IBRs via an analysis of the following weighted-components: •the interpolated rates from yields on outstanding U.S. Treasury issuances for up to 30 years and for years 31 and beyond, longer-term publicly traded educational institution debt issued by high credit quality educational institutions with maturity dates exceeding 31 years, •observable mortgage rates spread over U.S. Treasury issuances, and •unlevered property yields and discount rates.
The Company then applied adjustments to account for considerations related to term and interpolated the IBR. Lessor The Company leases primarily Class A office, life sciences, retail and residential space to tenants. These leases may contain extension and termination options that are predominately at the sole discretion of the tenant, provided certain conditions are satisfied. In a few instances, the leases also contain purchase options, which would be exercisable at fair market value. Also, certain of the Company’s leases include rental payments that are based on a percentage of the tenant sales in excess of contractual amounts. Per ASC 842, lessors do not need to separate nonlease components from the associated lease component if certain criteria stated above are met for each class of underlying assets. The guidance in ASC 842 defines “underlying asset” as “an asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.” Based on the above guidance, the Company considers real estate assets as a class of underlying assets and will not be further delineating it into specific uses of the real estate asset as the risk profiles are similar in nature. Lease components are elements of an arrangement that provide the customer with the right to use an identified asset. Nonlease components are distinct elements of a contract that are not related to securing the use of the leased asset and revenue is recognized in accordance with ASC 606. The Company considers common area maintenance (CAM) and service income associated with tenant work orders to be made bynonlease components because they represent delivery of a separate service but are not considered a cost of securing the identified asset. In the
case of the Company’s business, the identified asset would be the leased real estate (office, life sciences, retail or residential). The Company assessed and concluded that the timing and pattern of transfer for nonlease components and the associated lease component are the same. The Company determined that the predominant component was the lease component and as such its leases will continue to qualify as operating leases and the Company has made a policy election to account for and present the lease component and the nonlease component as a single component in the revenue section of December 31, 2017, under non-cancelable ground leasesthe Consolidated Statements of Operations labeled Lease. Prior to the January 1, 2019 adoption of ASC 842, nonlease components had been included within Recoveries from Tenants Revenue, Parking and Other Revenue and Development and Management Services Revenue on the Company’s Consolidated Statements of Operations. Recoveries from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes and other recoverable costs, are recognized as revenue in the period during which expire on various dates through 2114,the expenses are as follows: | | | | | Years Ending December 31, | (in thousands) | 2018 | $ | 11,349 |
| 2019 | 16,360 |
| 2020 | 25,552 |
| 2021 | 11,814 |
| 2022 | 8,894 |
| Thereafter | 576,315 |
|
Capital Leases
incurred. The Company has three capital lease obligations with various initial term expiration dates through 2036. The following reflectsrecognizes these reimbursements on a gross basis, as the gross amountCompany obtains control of assets recorded under capital leases by asset class at December 31, 2017the goods and December 31, 2016 (in thousands): | | | | | | | | | | | | December 31, | | | 2017 | | 2016 | Buildings and improvements | | $ | 23,636 |
| | $ | 23,636 |
| Construction in progress | | 28,962 |
| | — |
| Total | | $ | 52,598 |
| | $ | 23,636 |
|
The future minimum lease payments, as of December 31, 2017, relatedservices before they are transferred to the three capital leases, through 2036tenant.
In addition, in accordance with ASC 842, lessors will only capitalize incremental direct leasing costs (See “Deferred Charges”). As a result, upon adoption of ASC 842 on January 1, 2019, the Company no longer capitalizes non-incremental legal costs and internal leasing wages. These costs are expensed as follows:incurred. The expensing of these items is included within General and Administrative Expense on the Consolidated Statements of Operations. | | | | | Years Ending December 31, | (in thousands) | 2018 | $ | 913 |
| 2019 | 1,392 |
| 2020 | 2,097 |
| 2021 | 1,375 |
| 2022 | 930 |
| Thereafter | 74,185 |
| Total expected minimum lease payments | 80,892 |
| Interest portion | (29,296 | ) | Present value of expected net minimum lease payments | $ | 51,596 |
|
Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income available to common shareholders, as adjusted for undistributed earnings (if any) of certain securities issued by Boston Properties Limited Partnership, by the weighted average number of shares of Common Stock outstanding during the year. Diluted EPS reflects the potential dilution that could occur from shares issuable in connection with awards under stock-based compensation plans, including upon the exercise of stock options, and securities of Boston Properties Limited Partnership that are exchangeable for Common Stock. Earnings Per Common Unit Basic earnings per common unit is computed by dividing net income available to common unitholders, as adjusted for undistributed earnings (if any) of certain securities issued by Boston Properties Limited Partnership, by the weighted average number of common units outstanding during the year. Diluted earnings per common unit reflects the potential dilution that could occur from units issuable in connection with awards under Boston Properties, Inc.’s stock-based compensation plans, including upon the exercise of stock options, and conversion of preferred units of Boston Properties Limited Partnership. Fair Value of Financial Instruments The carrying values of cash and cash equivalents, marketable securities, escrows, receivables, accounts payable, accrued expenses and other assets and liabilities are reasonable estimates of their fair values because of the short maturities of these instruments.
The Company follows the authoritative guidance for fair value measurements when valuing its financial instruments for disclosure purposes. Boston Properties Limited Partnership determinesThe table below presents the fair value of its unsecured senior notes using market prices. The inputs used in determiningfinancial instruments that are being valued for disclosure purposes as well as the fair value of Boston Properties Limited Partnership’s unsecured senior notes isLevel at which they are categorized at a Level 1 basis (asas defined in ASC 820 "Fair“Fair Value Measurements and Disclosures", the accounting standards for Disclosures” (“ASC 820”) (see “New Accounting Pronouncements Adopted—Fair Value Measurements and Disclosures) due toMeasurement”). | | | | | | Financial Instrument | Level | Unsecured senior notes (1) | Level 1 | Related party note receivable | Level 3 | Notes receivable | Level 3 | Mortgage notes payable | Level 3 | Unsecured term loan / line of credit | Level 3 |
_______________ (1) If trading volume for the fact that it uses quoted market rates to value these instruments. However,period is low, the inputs used in determining the fair valuevaluation could be categorized at a level 2 basis (as defined in the accounting standards for Fair Value Measurements and Disclosures) if trading volumes are low. The Company determines the fair valueas Level 2.
hypothetical future interest payments on mortgage debt based on current market rates for similar securities. In determining the current market rates, the Company adds its estimates of market spreads to the quoted yields on federal government treasury securities with similar maturity dates to its debt. The inputs used in determining the fair value of the Company’s mortgage notes payable and mezzanine notes payable are categorized at a level 3 basis (as defined in the accounting standards for Fair Value Measurements and Disclosures) due to the fact that the Company considers the rates used in the valuation techniques to be unobservable inputs. To the extent that there are outstanding borrowings under the unsecured line of credit, the Company utilizes a discounted cash flow methodology in order to estimate the fair value. To the extent that credit spreads have changed since the origination, the net present value of the difference between future contractual interest payments and future interest payments based on the Company’s estimate of a current market rate would represent the difference between the book value and the fair value. The Company’s estimate of a current market rate is based upon the rate, considering current market conditions and the Company’s specific credit profile, at which it estimates it could obtain similar borrowings. To the extent there are outstanding borrowings, this current market rate is estimated and therefore would be primarily based upon a level 3 input.
Because the Company’s valuations of its financial instruments are based on these typesthe above Levels and involve the use of estimates, the actual fair values of its financial instruments may differ materially iffrom those estimates. The following table identifies the range and weighted average discount rate for the significant unobservable inputs for the Company’s estimates do not prove to be accurate, andLevel 3 fair value measured instruments as of December 31, 2020. | | | | | | | | | | | | Financial Instrument | Level | Range | Weighted Average | Related party note receivable | Level 3 | 3.64% | 3.64% | Notes receivable | Level 3 | 3.60% - 8.00% | 5.87% | Mortgage notes payable | Level 3 | 2.00% - 3.04% | 2.21% | Unsecured term loan / line of credit | Level 3 | 1.04% | 1.04% |
In addition, the Company’s estimated fair values for these instruments as of the end of the applicable reporting period are not projections of, nor necessarily indicative of, estimated or actual fair values in future reporting periods. The following table presents the aggregate carrying value of the Company’s related party note receivable, net, notes receivable, net, mortgage notes payable, net, mezzanine notes payable, unsecured senior notes, net, and unsecured line of credit and unsecured term loan, net and the Company’s corresponding estimate of fair value as of December 31, 20172020 and December 31, 20162019 (in thousands): | | | | | | | | | | | | | | December 31, 2020 | | December 31, 2019 | | December 31, 2017 | | December 31, 2016 | | Carrying Amount | | Estimated Fair Value | | Carrying Amount | | Estimated Fair Value | Related party note receivable, net | | Related party note receivable, net | $ | 77,552 | | | $ | 84,579 | | | $ | 80,000 | | | $ | 81,931 | | Note receivable, net | | Note receivable, net | 18,729 | | | 19,372 | | | 15,920 | | | 14,978 | | Total | | Total | $ | 96,281 | | | $ | 103,951 | | | $ | 95,920 | | | $ | 96,909 | | | Carrying Amount | | Estimated Fair Value | | Carrying Amount | | Estimated Fair Value | | | | | | | | | Mortgage notes payable, net | $ | 2,979,281 |
| | $ | 3,042,920 |
| | $ | 2,063,087 |
| | $ | 2,092,237 |
| Mortgage notes payable, net | $ | 2,909,081 | | | $ | 3,144,150 | | | $ | 2,922,408 | | | $ | 2,984,956 | | Mezzanine notes payable | — |
| | — |
| | 307,093 |
| | 308,344 |
| | Unsecured senior notes, net | 7,247,330 |
| | 7,461,615 |
| | 7,245,953 |
| | 7,428,077 |
| Unsecured senior notes, net | 9,639,287 | | | 10,620,527 | | | 8,390,459 | | | 8,826,375 | | Unsecured line of credit | 45,000 |
| | 45,000 |
| | — |
| | — |
| Unsecured line of credit | 0 | | | 0 | | | 0 | | | 0 | | Unsecured term loan, net | | Unsecured term loan, net | 499,390 | | | 500,326 | | | 498,939 | | | 500,561 | | Total | $ | 10,271,611 |
| | $ | 10,549,535 |
| | $ | 9,616,133 |
| | $ | 9,828,658 |
| Total | $ | 13,047,758 | | | $ | 14,265,003 | | | $ | 11,811,806 | | | $ | 12,311,892 | |
The Company uses interest rate swap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Although the Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. The Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Derivative Instruments and Hedging Activities Derivative instruments and hedging activities require management to make judgments on the nature of its derivatives and their effectiveness as hedges. These judgments determine if the changes in fair value of the derivative instruments are reported in the Consolidated Statements of Operations as a component of net income or as a component of comprehensive income and as a component of equity on the Consolidated Balance Sheets. While management believes its judgments are reasonable, a change in a derivative’s effectiveness as a hedge could materially affect expenses, net income and equity. The Company accounts for both the effective portionand ineffective portions of changes in the fair value of a derivative in other comprehensive income (loss) and
subsequently reclassifies the effective portionfair value of the derivative to earnings over the term that the hedged transaction affects earnings. The Company accounts for the ineffective portion of changesearnings and in the fair valuesame line item as the hedged transaction within the statements of a derivative directly in earnings.operations (see “New Accounting Pronouncements Adopted—Derivatives and Hedging”).
Stock-Based Employee Compensation Plans At December 31, 2017,2020, the Company hashad a stock-based employee compensation plan. The Company accounts for the plan under the guidance in ASC 718 “Compensation – Stock Compensation” (“ASC 718”), which revised the fair value based method of accounting for share-based payment liabilities, forfeitures and modifications of stock-based awards and clarified previous guidance in several areas, including measuring fair value, classifying an award as equity or as a liability and attributing compensation cost to reporting periods. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates include such items as depreciation and allowances for doubtful accounts. Actual results could differ from those estimates. RecentThe Company bases its estimates on historical experience and on various other assumptions that it considers to be reasonable under the circumstances, including the impact of extraordinary events such as COVID-19, the results of which form the basis for making significant judgments about the carrying values of assets and liabilities, assessments of future collectability, and other areas of the financial statements that are impacted by the use of estimates. Actual results may differ from these estimates under different assumptions or conditions.
New Accounting Pronouncements Adopted Financial Instruments - Credit Losses In May 2014,June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2014-09”2018-19”). The objective of ASU 2014-09 is to establish a single comprehensive model for entities to use in accounting for revenue2018-19 clarifies that receivables arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying ASU 2014-09, companies will perform a five-step analysis of transactions to determine when and how revenue is recognized. ASU 2014-09 applies to all contracts with customers except those thatoperating leases are not within the scope of other topicsASC 326-20, “Financial Instruments - Credit Losses - Measured at Amortized Cost,” which addresses financial assets measured at amortized cost basis, including net investments in the FASB’s ASC. In August 2015, the FASB issued ASU 2015-14, “Revenueleases arising from Contractssales-type and direct financing leases. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Customers (Topic 606): Deferral of the Effective Date”ASC 842 - “Leases” (“ASU 2015-14”), which delayed the effective date of ASU 2014-09 by one year making it effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date. In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”ASC 842”). ASU 2016-12 is intended to clarify2016-13 and provide practical expedients for certain aspects of ASU 2014-09, which outlines a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and notes that lease contracts with customers are a scope exception. ASU 2014-09 is2018-19 were effective for the Company for reporting periods beginning after December 15, 2017.2019, with early adoption permitted. ASU 2016-13 and ASU 2018-19 are applicable to the Company with respect to (1) certain of its accounts receivable, except for amounts arising from operating leases accounted for under ASC 842, (2) its related party note receivable, (3) its notes receivable and (4) certain of its off-balance sheet credit exposures. The Company adopted ASU 2014-092016-13 and ASU 2018-19 effective January 1, 20182020 using the modified retrospective approach. The Company expects that executory costs and certain non-lease components of revenue from leases may be impacted by the adoption of ASU 2014-09 (upon2016-13 and ASU 2018-19 resulted in the adoption of ASU 2016-02). The adoption of ASU 2014-09 isCompany recognizing an allowance for current expected to result in a change to the timing pattern of revenue recognized, but not the total revenue recognized over time for certain of the Company’s development services revenue. credit losses associated with (1) its related party note receivable, (2) its notes receivable and (3) an off-balance sheet loan commitment arrangement. As a result, the modified retrospective approach is expected to resultresulted in the Company recognizing on January 1, 20182020, the cumulative effect of adopting ASU 2014-09 reflecting2016-13 and ASU 2018-19 aggregating approximately $1.5 million to Dividends in Excess of Earnings of Boston Properties, Inc. and Partners’ Capital of Boston Properties Limited Partnership and approximately $0.2 million to Noncontrolling Interests - Common Units of Boston Properties, Inc. and Noncontrolling Interests - Redeemable Partnership Units of Boston Properties Limited Partnership on the impactcorresponding Consolidated Balance Sheets.
Fair Value Measurement In August 2018, the new guidanceFASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to certainthe Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 is intended to improve the effectiveness of the Company’s outstanding development services contracts.disclosures required by entities regarding recurring and nonrecurring fair value measurements. ASU 2014-09 also updates the principal versus agent considerations and as a result2018-13 was effective for the Company determined that amounts reimbursed for payrollreporting periods beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2018-13 on January 1, 2020 and related costs received from third parties in connection with management services contracts should be reflected on a gross basis instead of on a net basis as the Company has determined that it is the principal under these arrangements. The adoption of ASU 2014-09 willdid not have a material impact on the Company’s consolidated financial statements. Derivatives and Hedging In February 2016,October 2018, the FASB issued ASU 2016-02, “Leases2018-16, “Derivatives and Hedging (Topic 842)”815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes” (“ASU 2016-02”2018-16”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases2018-16 permits the use of the overnight index swap rate based on the principleSecured Overnight Financing Rate (“SOFR”) to be used as a U.S. benchmark interest rate for purposes of whetherapplying hedge accounting under ASC 815, “Derivatives and Hedging (Topic 815).” ASU 2018-16 was effective for the Company, which has already adopted ASU 2017-12, “Derivatives and Hedging (Topic 815):Targeted Improvements to Accounting for Hedging Activities” for reporting periods beginning after December 15, 2018 and was required to be adopted on a prospective basis for qualifying new or re-designated hedging relationships entered into on or after the date of adoption. The Company adopted ASU 2018-16 on January 1, 2019 and the adoption did not have a material impact on the lease is effectively a financed purchaseCompany’s consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the leased asset byEffects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the lessee. This classificationyear ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will determine whetherbe based matches the lease expense is recognized basedindex on an effective interest method or on a straight-line basis over the termcorresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the lease. A lessee is also requiredguidance and may apply other elections as applicable as additional changes in the market occur. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope” (“ASU 2021-01”). ASU 2021-01 amends the scope of the recent reference rate reform guidance (Topic 848). ASU 2021-01 permits entities to record a right-of-use asset and a lease liabilityelect certain optional expedients when accounting for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 monthsderivative instruments impacted by changes in the interest rate used for margining, discounting, or less will be accounted for similar to existing guidance for operating leases today.contract price alignment (i.e., discount transition). The new standard requires lessorsoptional expedients for contract modifications and hedge accounting are expected to accountbenefit companies, including those with certain centrally cleared derivatives affected by a discount rate transition in 2020. ASU 2021-01 is effective immediately and can be applied retrospectively to any interim period beginning January 1, 2020 or prospectively to any new modifications in any period including or subsequent to the issuance date. ASU 2021-01 did not have a material impact on the Company’s consolidated financial statements. Consolidation In October 2018, the FASB issued ASU 2018-17, “Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for leases using an approach thatVariable Interest Entities” (“ASU 2018-17”). ASU 2018-17 is substantially equivalentintended to existing guidanceimprove the accounting when considering indirect interests held through related parties under common control for sales-type leases, direct financing leasesdetermining whether fees paid to decision makers and operating leases.service providers are variable interests. ASU 2016-02 supersedes previous leasing standards. ASU 2016-02 is2018-17 was effective for the Company for reporting periods beginning after December 15, 2018,2019, with early adoption permitted. The Company will adoptadopted ASU 2016-02 effective2018-17 on January 1, 2019 using the modified retrospective approach. The Company is in the process of evaluating whether it will elect to apply the practical
expedients. The Company is in the process of adopting ASU 2016-02, with its project team compiling an inventory of its leases that will be impacted by2020 and the adoption of ASU 2016-02. The Company continues to assess the impact of adopting ASU 2016-02. However, the Company will account for operating leases under which it is the lessor on its balance sheet in a manner similar to its current accounting with the underlying leased asset recognized as real estate. In January 2018, the FASB issued a proposed ASU that would allow lessors to elect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standalone selling prices. If issued, this practical expedient will allow lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenue recognition of the combined single lease component is the same, and (ii) the related lease component and, the combined single lease component would be classified as an operating lease. If the practical expedient in the proposed ASU is issued, it could allow for tenant recoveries that qualify as non-lease components to be presented under a single lease component presentation. However, without the proposed practical expedient, tenant recoveries would be separated into lease and non-lease components. For leases in which the Company is the lessee, primarily consisting of ground leases, the Company will recognize a right-of-use asset and a lease liability equal to the present value of the minimum lease payments with rental payments being applied to the lease liability and to interest expense and the right-of-use asset being amortized to expense over the term of the lease. In addition, under ASU 2016-02, lessors will only capitalize incremental direct leasing costs. As a result, the Company will no longer be able to capitalize legal costs and internal leasing wages and instead will be required to expense these and other non-incremental costs as incurred.
In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 is intended to improve the accounting for share-based payments and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment awards are simplified with ASU 2016-09, including income tax consequences, classification of awards as equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for the Company for reporting periods beginning after December 15, 2016, with early adoption permitted. On January 1, 2017, the Company adopted ASU 2016-09 and elected to make an accounting policy change to its method of accounting for forfeitures on its awards of stock-based compensation including the issuance of shares of restricted common stock, LTIP Units and MYLTIP Units. The Company now accounts for forfeitures as they occur instead of estimating the number of forfeitures upon the issuance of such awards of stock-based compensation. The adoption resulted in the Company recognizing cumulative effect of a change in accounting principle adjustments to its consolidated balance sheets totaling approximately $0.3 million to Dividends in Excess of Earnings and Partners’ Capital for Boston Properties, Inc. and Boston Properties Limited Partnership, respectively, and approximately $1.8 million to noncontrolling interests - common units of Boston Properties Limited Partnership and noncontrolling interests - redeemable partnership units for Boston Properties, Inc. and Boston Properties Limited Partnership, respectively.
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2016-15”). ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The areas addressed in the new guidance related to debt prepayment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned and bank-owned life insurance policies, distributions received from equity method investments, beneficial interest in securitization transactions, and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for the Company for reporting periods beginning after December 15, 2017, with early adoption permitted (provided that all of the amendments are adopted in the same period), and will be applied retrospectively to all periods presented. The Company adopted ASU 2016-15 effective January 1, 2018. The adoption of ASU 2016-15 will result in the retrospective classification of debt prepayment costs as financing activities instead of operating activities in the Company's consolidated statements of cash flows.
In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2016-18”). ASU 2016-18 will require companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 will require a disclosure of a reconciliation between the statement of financial position and the statement of cash flows when the statement of financial position includes more than one line item for cash, cash equivalents, restricted cash and restricted cash equivalents. Entities with material restricted cash and restricted cash equivalents balances will be required to disclose the nature of the restrictions. ASU 2016-18 is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. The Company adopted ASU
2016-18 effective January 1, 2018. The adoption of ASU 2016-18 willdid not have a material impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. This update is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for transactions that have not been reported in previously issued (or available to be issued) financial statements and shall be applied on a prospective basis. The Company early adopted ASU 2017-01 during the first quarter of 2017. The Company expects that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.
In February 2017, the FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” (“ASU 2017-05”). ASU 2017-05 updates the definition of an “in substance nonfinancial asset” and clarifies the derecognition guidance for nonfinancial assets to conform with the new revenue recognition standard. The effective date and transition methods of ASU 2017-05 are aligned with ASU 2014-09 described above and are effective for the first interim period within annual reporting periods beginning after December 15, 2017. The Company adopted ASU 2017-05 effective January 1, 2018 using the modified retrospective approach. The adoption of ASU 2017-05 will not have a material impact on the Company's consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”). ASU 2017-09 is intended to provide clarity and reduce (1) diversity in practice, (2) cost and (3) complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for public entities for fiscal years and interim periods beginning after December 15, 2017. The Company adopted ASU 2017-09 effective January 1, 2018. The adoption of ASU 2017-09 will not have a material impact on the Company's consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). ASU 2017-12 was issued with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. ASU 2017-12 also makes certain targeted improvements to simplify the application of the hedge accounting guidance. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company early adopted ASU 2017-12 effective January 1, 2018. The adoption of ASU 2017-12 will not have a material impact on the Company's consolidated financial statements.
Boston Properties, Inc. Equity Offering Costs Underwriting commissions and offering costs have been reflected as a reduction of additional paid-in capital.
Treasury Stock Boston Properties, Inc.’s share repurchases are reflected as treasury stock utilizing the cost method of accounting and are presented as a reduction to consolidated stockholders’ equity. Dividends Earnings and profits, which determine the taxability of dividends to stockholders, will differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of gains/losses on the sale of real property, revenue and expense recognition, compensation expense, and in the estimated useful lives and basis used to compute depreciation.
The tax treatment of common dividends per share for federal income tax purposes is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the year ended December 31, | | | 2020 | | 2019 | | 2018 | | | Per Share | | % | | Per Share | | % | | Per Share | | % | Ordinary income | | $ | 2.52 | | | 64.91 | % | | $ | 2.99 | | | 94.84 | % | | $ | 2.79 | | | 78.17 | % | Capital gain income | | 0.99 | | | 25.49 | % | | 0.16 | | | 5.16 | % | | 0.78 | | | 21.83 | % | Return of capital | | 0.37 | | | 9.60 | % | | 0 | | | 0 | % | | 0 | | | 0 | % | Total | | $ | 3.88 | | (1) | 100.00 | % | | $ | 3.15 | | (2) | 100.00 | % | | $ | 3.57 | | (3) | 100.00 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | For the year ended December 31, | | | 2017 | | 2016 | | 2015 | | | Per Share | | % | | Per Share | | % | | Per Share | | % | Ordinary income | | $ | 2.86 |
| | 98.29 | % | | $ | 2.76 |
| | 90.51 | % | | $ | 2.34 |
| | 57.97 | % | Capital gain income | | 0.05 |
| | 1.71 | % | | 0.29 |
| | 9.49 | % | | 1.70 |
| | 42.03 | % | Total | | $ | 2.91 |
| (1) | 100.00 | % | | $ | 3.05 |
| (2) | 100.00 | % | | $ | 4.04 |
| (3) | 100.00 | % |
__________________________
| | (1) | The fourth quarter 2017 regular quarterly dividend was $0.80 per common share of which approximately $0.47 per common share was allocable to 2017 and approximately $0.33 per common share is allocable to 2018. |
| | (2) | The fourth quarter 2016 regular quarterly dividend was $0.75 per common share of which approximately $0.56 per common share was allocable to 2016 and approximately $0.19 per common share is allocable to 2017. |
| | (3) | The fourth quarter 2015 dividend of $1.90 per common share consists of a $1.25 per common share special dividend and a $0.65 per common share regular quarterly dividend. Approximately $1.35 per common share was allocable to 2015 and approximately $0.55 per common share is allocable to 2016. |
(1)The fourth quarter 2020 regular quarterly dividend was $0.98 per common share, all of which was allocable to 2021.
(2)The fourth quarter 2019 regular quarterly dividend was $0.98 per common share of which approximately $0.04 per common share was allocable to 2019 and approximately $0.94 per common share was allocable to 2020. (3)The fourth quarter 2018 regular quarterly dividend was $0.95 per common share of which approximately $0.69 per common share was allocable to 2018 and approximately $0.26 per common share was allocable to 2019. Income Taxes Boston Properties, Inc. has elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code, of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 1997. As a result, it generally will not be subject to federal corporate income tax on its taxable income that is distributed to its stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its annual taxable income (with certain adjustments). Boston Properties, Inc.’s policy is to distribute at least 100% of its taxable income. Accordingly, the only provision for federal income taxes in the accompanying consolidated financial statements relates to Boston Properties, Inc.’s consolidated taxable REIT subsidiaries. Boston Properties, Inc.’s taxable REIT subsidiaries did not have significant tax provisions or deferred income tax items. Boston Properties, Inc. has no uncertain tax positions recognized as of December 31, 2020 and 2019.At December 31, 2020, Boston Properties, Inc.’s tax returns for the years 2017 and 2016.forward remain subject to examination by the major tax jurisdictions under the statute of limitations. The Company owns a hotel property that is leased by ait leases to one of its taxable REIT subsidiarysubsidiaries and that is managed by Marriott International, Inc. The hotel taxable REIT subsidiary, a wholly owned subsidiary of Boston Properties Limited Partnership, is the lessee pursuant to the lease for the hotel property. As lessor, Boston Properties Limited Partnership is entitled to a percentage of gross receipts from the hotel property. Marriott International, Inc. continues to manage the hotel property under the Marriott name and under terms of the existinga management agreement. The hotel taxable REIT subsidiary is subject to tax at the federal and state level and, accordingly, Boston Properties, Inc. has recorded a tax provision in its Consolidated Statements of Operations for the years ended December 31, 2017, 20162020, 2019 and 2015.2018. The net difference between the tax basis and the reported amounts of Boston Properties, Inc.’s assets and liabilities is approximately $1.8 billion and $1.7 billion as of December 31, 2017 and 2016, respectively, which is primarily related to the difference in basis of contributed property and accrued rental income.
Certain entities included in Boston Properties, Inc.’s consolidated financial statements are subject to certain state and local taxes. These taxes are recorded as operating expenses in the accompanying consolidated financial statements.
The following table reconciles GAAP net income attributable to Boston Properties, Inc. to taxable income (unaudited):
| | | | | | | | | | | | | | | | For the year ended December 31, | | | 2017 | | 2016 | | 2015 | | | (in thousands) | Net income attributable to Boston Properties, Inc. | | $ | 462,439 |
| | $ | 512,785 |
| | $ | 583,106 |
| Straight-line rent and net “above-” and “below-market” rent adjustments | | (77,801 | ) | | (65,861 | ) | | (92,483 | ) | Book/Tax differences from depreciation and amortization | | 142,234 |
| | 235,819 |
| | 307,115 |
| Book/Tax differences from interest expense | | (18,136 | ) | | (36,223 | ) | | (43,349 | ) | Book/Tax differences on gains/(losses) from capital transactions | | 1,123 |
| | (70,880 | ) | | (74,482 | ) | Book/Tax differences from stock-based compensation | | 37,990 |
| | 33,463 |
| | 22,008 |
| Tangible Property Regulations | | (116,265 | ) | | (104,783 | ) | | (74,887 | ) | Other book/tax differences, net | | 33,411 |
| | (6,121 | ) | | (15,259 | ) | Taxable income | | $ | 464,995 |
| | $ | 498,199 |
| | $ | 611,769 |
|
Boston Properties Limited Partnership Income Taxes The partners are required to report their respective share of Boston Properties Limited Partnership’s taxable income or loss on their respective tax returns and are liable for any related taxes thereon. Accordingly, the only provision for federal income taxes in the accompanying consolidated financial statements relates to Boston
Properties Limited Partnership’s consolidated taxable REIT subsidiaries. Boston Properties Limited Partnership’s taxable REIT subsidiaries did not have significant tax provisions or deferred income tax items. Boston Properties Limited Partnership has no uncertain tax positions recognized as of December 31, 2020 and 2019. At December 31, 2020, Boston Properties Limited Partnership’s tax returns for the years 2017 and 2016.forward remain subject to examination by the major tax jurisdictions under the statute of limitations. The Company owns a hotel property which is managed through a taxable REIT subsidiary. The hotel taxable REIT subsidiary, a wholly owned subsidiary Boston Properties Limited Partnership, is the lessee pursuant to the lease for the hotel property. As lessor, Boston Properties Limited Partnership is entitled to a percentage of gross receipts from the hotel property. Marriott International, Inc. continues to manage the hotel property under the Marriott name and under terms of the existinga management agreement. The hotel taxable REIT subsidiary is subject to tax at the federal and state level and, accordingly, Boston Properties Limited Partnership has recorded a tax provision in its Consolidated Statements of Operations for the years ended December 31, 2017, 20162020, 2019 and 2015. The net difference between the tax basis and the reported amounts of Boston Properties Limited Partnership’s assets and liabilities is approximately $2.9 billion and $2.7 billion as of December 31, 2017 and 2016, respectively, which is primarily related to the difference in basis of contributed property and accrued rental income.2018.
Certain entities included in Boston Properties Limited Partnership’s consolidated financial statements are subject to certain state and local taxes. These taxes are recorded as operating expenses in the accompanying consolidated financial statements.
The following table reconciles GAAP net income attributable to Boston Properties Limited Partnership to taxable income (unaudited):
| | | | | | | | | | | | | | | | For the year ended December 31, | | | 2017 | | 2016 | | 2015 | | | (in thousands) | Net income attributable to Boston Properties Limited Partnership | | $ | 523,366 |
| | $ | 585,841 |
| | $ | 659,248 |
| Straight-line rent and net “above-” and “below-market” rent adjustments | | (86,773 | ) | | (73,604 | ) | | (103,227 | ) | Book/Tax differences from depreciation and amortization | | 144,436 |
| | 245,239 |
| | 329,629 |
| Book/Tax differences from interest expense | | (20,227 | ) | | (40,481 | ) | | (48,385 | ) | Book/Tax differences on gains/(losses) from capital transactions | | 784 |
| | (69,683 | ) | | (67,602 | ) | Book/Tax differences from stock-based compensation | | 42,371 |
| | 37,397 |
| | 24,565 |
| Tangible Property Regulations | | (129,673 | ) | | (117,102 | ) | | (83,587 | ) | Other book/tax differences, net | | 37,607 |
| | (3,387 | ) | | (14,561 | ) | Taxable income | | $ | 511,891 |
| | $ | 564,220 |
| | $ | 696,080 |
|
3. Real Estate Boston Properties, Inc. Real estate consisted of the following at December 31, 20172020 and December 31, 20162019 (in thousands): | | | | 2017 | | 2016 | | December 31, 2020 | | December 31, 2019 | Land | | $ | 5,080,679 |
| | $ | 4,879,020 |
| Land | | $ | 5,069,206 | | | $ | 5,111,606 | | Right of use assets - finance leases | | Right of use assets - finance leases | | 237,393 | | | 237,394 | | Right of use assets - operating leases | | Right of use assets - operating leases | | 146,406 | | | 148,640 | | Land held for future development (1) | | 204,925 |
| | 246,656 |
| Land held for future development (1) | | 450,954 | | | 254,828 | | Buildings and improvements | | 12,284,164 |
| | 11,890,626 |
| Buildings and improvements | | 13,777,691 | | | 13,646,054 | | Tenant improvements | | 2,219,608 |
| | 2,060,315 |
| Tenant improvements | | 2,752,880 | | | 2,656,439 | | Furniture, fixtures and equipment | | 37,928 |
| | 32,687 |
| Furniture, fixtures and equipment | | 49,606 | | | 44,313 | | Construction in progress | | 1,269,338 |
| | 1,037,959 |
| Construction in progress | | 868,773 | | | 789,736 | | Total | | 21,096,642 |
| | 20,147,263 |
| Total | | 23,352,909 | | | 22,889,010 | | Less: Accumulated depreciation | | (4,589,634 | ) | | (4,222,235 | ) | Less: Accumulated depreciation | | (5,534,102) | | | (5,266,798) | | | | $ | 16,507,008 |
| | $ | 15,925,028 |
| | $ | 17,818,807 | | | $ | 17,622,212 | |
_______________ | | (1) | Includes pre-development costs. |
(1)Includes pre-development costs.
Boston Properties Limited Partnership Real estate consisted of the following at December 31, 20172020 and December 31, 20162019 (in thousands): | | | | 2017 | | 2016 | | December 31, 2020 | | December 31, 2019 | Land | | $ | 4,976,303 |
| | $ | 4,774,460 |
| Land | | $ | 4,971,990 | | | $ | 5,011,153 | | Right of use assets - finance leases | | Right of use assets - finance leases | | 237,393 | | | 237,394 | | Right of use assets - operating leases | | Right of use assets - operating leases | | 146,406 | | | 148,640 | | Land held for future development (1) | | 204,925 |
| | 246,656 |
| Land held for future development (1) | | 450,954 | | | 254,828 | | Buildings and improvements | | 11,977,062 |
| | 11,581,795 |
| Buildings and improvements | | 13,498,098 | | | 13,351,286 | | Tenant improvements | | 2,219,608 |
| | 2,060,315 |
| Tenant improvements | | 2,752,880 | | | 2,656,439 | | Furniture, fixtures and equipment | | 37,928 |
| | 32,687 |
| Furniture, fixtures and equipment | | 49,606 | | | 44,313 | | Construction in progress | | 1,269,338 |
| | 1,037,959 |
| Construction in progress | | 868,773 | | | 789,736 | | Total | | 20,685,164 |
| | 19,733,872 |
| Total | | 22,976,100 | | | 22,493,789 | | Less: Accumulated depreciation | | (4,496,959 | ) | | (4,136,364 | ) | Less: Accumulated depreciation | | (5,428,576) | | | (5,162,908) | | | | $ | 16,188,205 |
| | $ | 15,597,508 |
| | $ | 17,547,524 | | | $ | 17,330,881 | |
_______________ | | (1) | Includes pre-development costs. |
(1)Includes pre-development costs.
Development/RedevelopmentDevelopments
On April 6, 2017, the Company commenced the construction of 145 Broadway, a build-to-suit Class A office project with approximately 485,000 net rentable square feet located in Cambridge, Massachusetts. On May 27, 2017,March 26, 2020, the Company completed and fully placed in-service Reservoir Place North,17Fifty Presidents Street located in Reston, Virginia. 17Fifty Presidents Street is a Class A office redevelopmentbuild-to-suit project with approximately 73,000 net rentable square feet located in Waltham, Massachusetts.
On August 24, 2017, the Company entered into a 15-year lease with the General Services Administration under which the Company will develop the new headquarters for the Transportation Security Administration (TSA). The TSA will occupy 100% of the office space of the approximately 634,000 net rentable square feet Class A office project and a parking garage at 6595 Springfield Center Drive located in Springfield, Virginia. Concurrently with the execution of the lease, the Company commenced development of the project and expects the building to be available for occupancy by the fourth quarter of 2020.
On September 16, 2017, the Company completed and fully placed in-service 888 Boylston Street, a Class A office and retail project with approximately 417,000 net rentable square feet located in Boston, Massachusetts.
On November 17, 2017, the Company partially placed in-service 191 Spring Street, a Class A office redevelopment project with approximately 171,000 net rentable square feet located in Lexington, Massachusetts.
On November 28, 2017, the Company commenced construction of its 20 CityPoint development project totaling approximately 211,000276,000 net rentable square feet of Class A office space located in Waltham, Massachusetts.that is 100% leased.
On DecemberJune 1, 2017, a consolidated entity in which2020, the Company has a 95% interest partiallycompleted and fully placed in-service Salesforce Tower,20 CityPoint, a Class A office project with approximately 1,400,000211,000 net rentable square feet located in Waltham, Massachusetts. The office portion of the property is 100% leased, including a lease with a future commencement. On June 26, 2020, the Company completed the acquisition of real property at 777 Harrison Street (known as Fourth + Harrison and formerly known as 425 Fourth Street) located in San Francisco, California for a gross purchase price, including entitlements, totaling approximately $140.1 million. On July 31, 2020 and December 16, 2020, the Company acquired real property at 759 Harrison Street located in San Francisco, California, which is expected to be included in the Fourth + Harrison development project, for an aggregate purchase price totaling approximately $4.5 million. 759 Harrison Street and Fourth + Harrison are expected to support the development of approximately 850,000 square feet of primarily commercial office space. On August 15, 2020, the Company completed and fully placed in-service The Skylyne, an approximately 331,000 square foot project comprised of 402 residential units and retail space located in Oakland, California. On November 3, 2020, the Company signed an approximately 138,000 square-foot, 10-year lease with a new tenant at 200 West Street in Waltham, Massachusetts. The Company is currently redeveloping a portion of 200 West Street into life sciences space with expected completion in 2021. With this lease, the property is 100% leased. Dispositions On December 1, 2017,January 28, 2020, the Company entered into a 16-year leasejoint venture with a tenantthird party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California. The Company contributed its 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for its 50% interest in the joint venture. 601, 611 and 651 Gateway consist of 3 Class A office properties aggregating approximately 288,000768,000 net rentable square feet of Class A office space to be locatedfeet. The partner contributed 3 properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $69.2 million in the Company's 2100 Pennsylvania Avenue development project. In 2016,future for its 50% ownership interest in the joint venture. As a result of the partner’s deferred contribution, the Company entered into ahad an initial approximately 55% interest in the joint venture. Future development agreement with The George Washington University to pursueprojects will be owned 49% by the development of 2100 Pennsylvania Avenue, a Class A office property with approximately 469,000 net rentable square feet on land parcels located in Washington, DC. The development agreement providesCompany and 51% by its partner. Upon the partner’s contribution, the Company ceased accounting for the execution ofjoint venture entity on a 75-year ground leaseconsolidated basis and is accounting for the property upon completionjoint venture entity on an unconsolidated basis using the equity method of accounting, as it has reduced its ownership interest in the joint venture entity and no longer has a controlling financial or operating interest in the joint venture entity (See Note 6). The Company recognized a gain on the retained and sold interest in
the real estate contributed to the joint venture totaling approximately $217.7 million for Boston Properties, Inc. and $222.4 million for Boston Properties Limited Partnership during the year ended December 31, 2020 within Gains on Sales of Real Estate on the respective Consolidated Statements of Operations, as the fair value of the entitlement processreal estate exceeded its carrying value. 601, 611 and relocation of existing tenants anticipated to occur in 2019. Ground Lease
On June 29, 2017, the Company executed a 99-year ground lease (including extension options), with the right to purchase prior to 10 years after stabilization of the development project as defined in the lease, for land adjacent to the MacArthur BART station located in Oakland, California. The Company has commenced development of a 402-unit residential building and supporting retail space on the site. The Company’s option to purchase the land, is considered a bargain purchase option and as a result, the Company has concluded that the lease should be accounted for as a capital lease. At the inception of the ground lease, the Company recorded an approximately $29.0 million capital lease asset and liability, which is reflected within Construction in Progress and Other Liabilities on the Company’s Consolidated Balance Sheets. Capital lease assets and liabilities are accounted for at the lower of fair market value or the present value of future minimum lease payments. This capital lease is for land only, therefore, the Company will not be depreciating the capital lease asset, because land is assumed to have an indefinite life.
As of June 29, 2017, future minimum lease payments related to this capital lease are as follows (in thousands):
| | | | | Period from June 29, 2017 through December 31, 2017 | $ | 5 |
| 2018 | 10 |
| 2019 | 10 |
| 2020 | 10 |
| 2021 | 13 |
| Thereafter | 38,778 |
| Total expected minimum lease payments | 38,826 |
| Interest portion | (9,864 | ) | Present value of expected net minimum lease payments | $ | 28,962 |
|
Acquisitions
On May 15, 2017, the Company acquired 103 Carnegie Center located in Princeton, New Jersey for a purchase price of approximately $15.8 million in cash. 103 Carnegie Center is an approximately 96,000 net rentable square foot Class A office property. The following table summarizes the allocation of the aggregate purchase price, including transaction costs, of 103 Carnegie Center at the date of acquisition (in thousands).
| | | | | Land | $ | 2,890 |
| Building and improvements | 11,229 |
| Tenant improvements | 871 |
| In-place lease intangibles | 2,389 |
| Below-market lease intangible | (1,426 | ) | Net assets acquired | $ | 15,953 |
|
The following table summarizes the estimated annual amortization of the acquired below-market lease intangibles and the acquired in-place lease intangibles for 103 Carnegie Center for the remainder of 2017 and each of the next four succeeding fiscal years (in thousands).
| | | | | | | | | | Acquired In-Place Lease Intangibles | | Acquired Below- Market Lease Intangibles | Period from May 15, 2017 through December 31, 2017 | $ | 660 |
| | $ | (248 | ) | 2018 | 590 |
| | (363 | ) | 2019 | 367 |
| | (337 | ) | 2020 | 243 |
| | (308 | ) | 2021 | 96 |
| | (105 | ) |
103 Carnegie Center651 Gateway contributed approximately $1.7$0.2 million of revenue and approximately ($0.3 million) of earningsnet income to the Company for the period from May 15, 2017January 1, 2020 through January 27, 2020 and contributed approximately $10.4 million and $8.6 million of net income to the Company for the years ended December 31, 2017.
Dispositions2019 and 2018, respectively.
On April 19, 2017,February 20, 2020, the Company completed the sale of an approximately 9.5-acre parcel of land at 30 Shattuck RoadNew Dominion Technology Park located in Andover, MassachusettsHerndon, Virginia for a gross sale price of $5.0$256.0 million. Net cash proceeds totaled approximately $5.0$254.0 million, resulting in a gain on sale of real estate totaling approximately $3.7 million.$192.3 million for Boston Properties, Inc. and approximately $197.1 million for Boston Properties Limited Partnership. New Dominion Technology Park is comprised of 2 Class A office properties aggregating approximately 493,000 net rentable square feet. New Dominion Technology Park contributed approximately $1.6 million of net income to the Company for the period from January 1, 2020 through February 19, 2020 and contributed approximately $6.8 million and $8.2 million of net income to the Company for the years ended December 31, 2019 and 2018, respectively. On June 13, 2017,25, 2020, the Company completed the sale of 40 Shattuck Roada portion of its Capital Gallery property located in Andover, MassachusettsWashington, DC for a gross sale price of $12.0approximately $253.7 million. Net cash proceeds totaled approximately $11.9$246.6 million, resulting in a gain on sale of real estate totaling approximately $28,000$203.5 million for Boston Properties, Inc. and approximately $0.6$207.0 million for Boston Properties Limited Partnership. 40 Shattuck RoadCapital Gallery is an approximately 122,000631,000 net rentable square foot Class A office property. 40 Shattuck RoadThe portion sold was comprised of approximately 455,000 net rentable square feet of commercial office space. The Company continues to own the land, underground parking garage and remaining commercial office and retail space containing approximately 176,000 net rentable square feet at the property. The sold portion of Capital Gallery contributed approximately $(28,000)$6.3 million of net lossincome to the Company for the period from January 1, 20172020 through June 13, 201724, 2020 and contributed approximately $(50,000)$15.0 million and $0.3$14.5 million of net income (loss) to the Company for the years ended December 31, 20162019 and 2015,2018, respectively.
On August 30, 2017,December 16, 2020, the Company completed the sale of its Reston Eastgate propertya parcel of land located in Reston, VirginiaMarlborough, Massachusetts for a gross sale price of $14.0approximately $14.3 million. Net cash proceeds totaled approximately $13.2$14.2 million, resulting in a gain on sale of real estate totaling approximately $2.8$5.2 million. 4. Leases The Company must make estimates as to the collectability of its accrued rent and accounts receivable related to lease revenue. Management analyzes accrued rent and accounts receivable by considering tenant creditworthiness, current economic trends, including the impact of COVID-19 on tenants’ businesses, and changes in tenants’ payment patterns when evaluating the collectability of the tenant’s receivable balance, including the accrued rent receivable, on a lease-by-lease basis. As a result of this analysis, during the year ended December 31, 2020, the Company wrote off approximately $67.7 million, related to accrued rent balances and approximately $22.6 million, related to accounts receivable balances. The write-offs were for tenants, primarily in the retail, entertainment and co-working sectors, that either terminated their leases or that the Company considered their accrued rent and/or accounts receivable balances no longer probable of collection. In April 2020, the FASB staff issued a question and answer document (“Lease Modification Q & A”) related to the application of lease accounting guidance for lease concessions, in accordance with ASC 842, as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q & A allows the Company, if certain criteria have been met, to assume that a lease concession was included within the enforceable rights and obligations of the existing lease agreement and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The Company did not utilize the guidance provided in the Lease Modification Q & A and instead elected to continue to account for the COVID-19 lease concessions on a lease-by-lease basis in accordance with the existing lease modification accounting framework.
Lessee The Company has four non-cancelable ground lease obligations, as lessee, which were classified as operating leases, with various initial term expiration dates through 2114. The Company recognizes ground rent expense on a straight-line basis over the term of the respective ground lease agreements. None of the amounts disclosed below for these ground leases contain variable payments, extension options or residual value guarantees. One of the ground leases does have an extension option. However, lease payments, for the extension option, for this ground lease are based on fair market value and as such have not been included in the analysis below. The Company has four finance lease obligations with various initial term expiration dates through 2094. The following table provides lease cost information for the Company’s operating and finance leases for the year ended (in thousands): | | | | | | | | | | | | | | | Lease costs | | December 31, 2020 | | December 31, 2019 | Operating lease costs | | $ | 13,948 | | | $ | 14,573 | | Finance lease costs | | | | | Amortization of right of use asset (1) | | $ | 56 | | | $ | 29 | | Interest on lease liabilities (2) | | $ | 583 | | | $ | 47 | |
_______________ (1)The finance leases relate to either land, buildings or assets that remain in development. For land leases classified as finance leases because of a purchase option that the Company views as an economic incentive, the Company follows its existing policy and does not depreciate land because it is assumed to have an indefinite life. For all other finance leases, the Company would amortize the right of use asset over the shorter of the useful life of the asset or the lease term. If the finance lease relates to a property under development, the amortization of the right of use asset may be eligible for capitalization. For assets under development, depreciation may commence once the asset is placed in-service and depreciation would be recognized in accordance with the Company’s policy. (2)NaN of the finance leases relate to assets under development for all or a portion of the years ended December 31, 2020 and December 31, 2019, respectively, and as such, a portion of the interest amount was capitalized. The following table provides other quantitative information for the Company’s operating and finance leases as of December 31, 2020 and December 31, 2019: | | | | | | | | | | | | | December 31, 2020 | | December 31, 2019 | Other information | | | | Weighted-average remaining lease term (in years) | | | | Operating leases | 51 | | 51 | Finance leases | 70 | | 71 | Weighted-average discount rate | | | | Operating leases | 5.7 | % | | 5.7 | % | Finance leases | 6.2 | % | | 6.2 | % |
The following table provides a maturity analysis for the Company’s lease liabilities related to its operating and finance leases as of December 31, 2020 (in thousands): | | | | | | | | | | | | | Operating | | Finance | 2021 | $ | 25,092 | | | $ | 5,896 | | 2022 | 18,020 | | | 10,206 | | 2023 | 10,262 | | | 9,701 | | 2024 (1) | 9,277 | | | 48,518 | | 2025 | 9,476 | | | 9,971 | | Thereafter | 548,478 | | | 1,373,177 | | Total lease payments | 620,605 | | | 1,457,469 | | Less: Interest portion | (418,892) | | | (1,220,977) | | Present value of lease payments | $ | 201,713 | | | $ | 236,492 | |
_______________ (1)Finance lease payments in 2024 include approximately $38.7 million related to a purchase option that the Company is reasonably certain it will exercise. Lessor The following table summarizes the components of lease revenue recognized during the years ended December 31, 2020 and 2019 included within the Company's Consolidated Statements of Operations (in thousands): | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | Lease Revenue | | | | | | 2020 | | 2019 | Fixed contractual payments | | | | | | $ | 2,211,915 | | | $ | 2,261,260 | | Variable lease payments | | | | | | 434,346 | | | 496,754 | | | | | | | | $ | 2,646,261 | | | $ | 2,758,014 | |
The future contractual lease payments to be received (excluding operating expense reimbursements and percentage rent) by the Company as of December 31, 2020, under non-cancelable operating leases which expire on various dates through 2049 (in thousands): | | | | | | Years Ending December 31, | | 2021 | $ | 2,177,848 | | 2022 | 2,188,846 | | 2023 | 2,144,213 | | 2024 | 2,043,264 | | 2025 | 1,901,624 | | Thereafter | 12,577,660 | |
NaN single tenant represented more than 10.0% of the Company’s total lease revenue for the year ended December 31, 2020. Ground Lease On July 29, 2020, the Company entered into a 99-year ground lease with a third-party hotel developer for land at its Reston EastgateNext property located in Reston Virginia, which will support the development of a 270-room, approximately 241,000 square foot hotel property. The lease commenced on October 21, 2020 and upon commencement, the Company performed classification testing. The ground lease is a parcelsubject to termination rights with respect to the hotel developer’s ability to obtain construction financing for the property and as of land containing approximately 21.7 acres located at 11011 Sunset Hills Road.the lease commencement date, the Company was not reasonably certain that those termination rights would not be exercised and as such it has accounted for this as an operating lease that will expire on August 28, 2022. 4.5. Deferred Charges
Deferred charges consisted of the following at December 31, 20172020 and December 31, 20162019 (in thousands): | | | | | | | | | | | | | | | | | 2020 | | 2019 | Leasing costs, including lease related intangibles | | $ | 1,023,058 | | | $ | 1,155,958 | | Financing costs | | 12,728 | | | 12,728 | | | | 1,035,786 | | | 1,168,686 | | Less: Accumulated amortization | | (395,701) | | | (479,473) | | | | $ | 640,085 | | | $ | 689,213 | |
| | | | | | | | | | | | 2017 | | 2016 | Leasing costs, including lease related intangibles | | $ | 1,147,181 |
| | $ | 1,132,092 |
| Financing costs | | 14,991 |
| | 6,094 |
| | | 1,162,172 |
| | 1,138,186 |
| Less: Accumulated amortization | | (483,134 | ) | | (452,023 | ) | | | $ | 679,038 |
| | $ | 686,163 |
|
The following table summarizes the scheduled amortization of the Company’s acquired in-place lease intangibles for each of the five succeeding years (in thousands). | | | | | | | Acquired In-Place Lease Intangibles | 2021 | $ | 10,352 | | 2022 | 5,464 | | 2023 | 3,854 | | 2024 | 2,220 | | 2025 | 2,174 | |
| | | | | | Acquired In-Place Lease Intangibles | 2018 | $ | 33,651 |
| 2019 | 27,333 |
| 2020 | 14,464 |
| 2021 | 8,777 |
| 2022 | 4,758 |
|
5.6. Investments in Unconsolidated Joint Ventures
The investments in unconsolidated joint ventures consist of the following at December 31, 20172020 and 2016:December 31, 2019: | | | | | | Carrying Value of Investment (1) | | | Carrying Value of Investment (1) | Entity | | Properties | | Nominal % Ownership | | December 31, 2017 | | December 31, 2016 | Entity | | Properties | | Nominal % Ownership | | December 31, 2020 | | December 31, 2019 | | | | | (in thousands) | | | | | | | (in thousands) | Square 407 Limited Partnership | | Market Square North | | 50.0 | % | | $ | (8,258 | ) | | $ | (8,134 | ) | Square 407 Limited Partnership | | Market Square North | | 50.0 | % | | $ | (3,766) | | | $ | (4,872) | | The Metropolitan Square Associates LLC | | Metropolitan Square | | 20.0 | % | | 3,339 |
| | 2,004 |
| | BP/CRF 901 New York Avenue LLC | | 901 New York Avenue | | 25.0 | % | (2) | (13,811 | ) | | (10,564 | ) | | BP/CRF Metropolitan Square, LLC | | BP/CRF Metropolitan Square, LLC | | Metropolitan Square | | 20.0 | % | | (13,584) | | | 9,134 | | 901 New York, LLC | | 901 New York, LLC | | 901 New York Avenue | | 25.0 | % | (2) | (12,264) | | | (12,113) | | WP Project Developer LLC | | Wisconsin Place Land and Infrastructure | | 33.3 | % | (3) | 39,710 |
| | 41,605 |
| WP Project Developer LLC | | Wisconsin Place Land and Infrastructure | | 33.3 | % | (3) | 35,297 | | | 36,789 | | Annapolis Junction NFM, LLC | | Annapolis Junction | | 50.0 | % | (4) | 18,381 |
| | 20,539 |
| | Annapolis Junction NFM LLC | | Annapolis Junction NFM LLC | | Annapolis Junction | | 50.0 | % | (4) | 13,463 | | | 25,391 | | 540 Madison Venture LLC | | 540 Madison Avenue | | 60.0 | % | | 66,179 |
| | 67,816 |
| 540 Madison Venture LLC | | 540 Madison Avenue | | 60.0 | % | (5) | 122 | | | 2,953 | | 500 North Capitol Venture LLC | | 500 North Capitol Street, NW | | 30.0 | % | | (3,876 | ) | | (3,389 | ) | 500 North Capitol Venture LLC | | 500 North Capitol Street, NW | | 30.0 | % | | (6,945) | | | (5,439) | | 501 K Street LLC | | 1001 6th Street | | 50.0 | % | (5) | 42,657 |
| | 42,528 |
| 501 K Street LLC | | 1001 6th Street | | 50.0 | % | (6) | 42,499 | | | 42,496 | | Podium Developer LLC | | The Hub on Causeway | | 50.0 | % | | 67,120 |
| | 29,869 |
| Podium Developer LLC | | The Hub on Causeway - Podium | | 50.0 | % | | 48,818 | | | 49,466 | | Residential Tower Developer LLC | | The Hub on Causeway - Residential | | 50.0 | % | (6) | 28,212 |
| | 20,803 |
| Residential Tower Developer LLC | | Hub50House | | 50.0 | % | | 50,943 | | | 55,092 | | Hotel Tower Developer LLC | | The Hub on Causeway - Hotel | | 50.0 | % | | 1,690 |
| | 933 |
| Hotel Tower Developer LLC | | The Hub on Causeway - Hotel Air Rights | | 50.0 | % | | 10,754 | | | 9,883 | | Office Tower Developer LLC | | Office Tower Developer LLC | | 100 Causeway Street | | 50.0 | % | | 56,312 | | | 56,606 | | 1265 Main Office JV LLC | | 1265 Main Street | | 50.0 | % | | 4,641 |
| | 4,779 |
| 1265 Main Office JV LLC | | 1265 Main Street | | 50.0 | % | | 3,787 | | | 3,780 | | BNY Tower Holdings LLC | | Dock 72 at the Brooklyn Navy Yard | | 50.0 | % | | 72,104 |
| | 33,699 |
| BNY Tower Holdings LLC | | Dock 72 | | 50.0 | % | | 29,536 | | | 94,804 | | BNYTA Amenity Operator LLC | | BNYTA Amenity Operator LLC | | Dock 72 | | 50.0 | % | | 1,846 | | | N/A | CA-Colorado Center Limited Partnership | | Colorado Center | | 50.0 | % | | 254,440 |
| | 510,623 |
| CA-Colorado Center Limited Partnership | | Colorado Center | | 50.0 | % | | 227,671 | | | 252,069 | | 7750 Wisconsin Avenue LLC | | 7750 Wisconsin Avenue | | 50.0 | % | (6) | 21,452 |
| | N/A |
| 7750 Wisconsin Avenue LLC | | 7750 Wisconsin Avenue | | 50.0 | % | | 58,112 | | | 56,247 | | BP-M 3HB Venture LLC | | BP-M 3HB Venture LLC | | 3 Hudson Boulevard | | 25.0 | % | | 113,774 | | | 67,499 | | SMBP Venture LP | | SMBP Venture LP | | Santa Monica Business Park | | 55.0 | % | | 145,761 | | | 163,937 | | Platform 16 Holdings LP | | Platform 16 Holdings LP | | Platform 16 | | 55.0 | % | (7) | 108,393 | | | 29,501 | | Gateway Portfolio Holdings LLC | | Gateway Portfolio Holdings LLC | | Gateway Commons | | 50.0 | % | (8) | 336,206 | | | N/A | Rosecrans-Sepulveda Partners 4, LLC | | Rosecrans-Sepulveda Partners 4, LLC | | Beach Cities Media Campus | | 50.0 | % | | 27,184 | | | N/A | | | | | $ | 593,980 |
| | $ | 753,111 |
| | $ | 1,273,919 | | | $ | 933,223 | |
_______________ | | (1) | Investments with deficit balances aggregating approximately $25.9 million and $22.1 million at December 31, 2017 and 2016, respectively, have been reflected within Other Liabilities in the Company’s Consolidated Balance Sheets. |
| | (2) | The Company’s economic ownership has increased based on the achievement of certain return thresholds. |
| | (3) | The Company’s wholly-owned subsidiary that owns Wisconsin Place Office also owns a 33.3% interest in the joint venture entity that owns the land, parking garage and infrastructure of the project. |
| | (4) | The joint venture owns four in-service buildings and two undeveloped land parcels. |
| | (5) | Under the joint venture agreement for this land parcel, the partner will be entitled to up to two additional payments from the venture based on increases in total entitled square footage of the project above 520,000 square feet and achieving certain project returns at stabilization. |
| | (6) | This entity is a VIE (See Note 2). |
(1)Investments with deficit balances aggregating approximately $36.6 million and $22.4 million at December 31, 2020 and 2019, respectively, are included within Other Liabilities in the Company’s Consolidated Balance Sheets. (2)The Company’s economic ownership has increased based on the achievement of certain return thresholds. At December 31, 2020 and 2019, the Company’s economic ownership was approximately 50%. (3)The Company’s wholly-owned subsidiary that owns Wisconsin Place Office also owns a 33.3% interest in the joint venture entity that owns the land, parking garage and infrastructure of the project. (4)The joint venture owns 2 in-service buildings.
(5)The property was sold on June 27, 2019. As of December 31, 2020 and 2019, the investment consisted of undistributed cash. (6)Under the joint venture agreement for this land parcel, the partner will be entitled to up to 2 additional payments from the venture based on increases in total entitled square footage of the project above 520,000 square feet and achieving certain project returns at stabilization. (7)This entity is a VIE (See Note 1). (8)As a result of the partner’s deferred contribution, the Company owns an approximately 55% interest in the joint venture at December 31, 2020. Future development projects will be owned 49% by the Company and 51% by its partner. Certain of the Company’s unconsolidated joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. With limited exceptions under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners. Under certain of the Company'sCompany’s joint venture agreements, if certain return thresholds are achieved, the partners or the Company will be entitled to an additional promoted interest or payments. The combined summarized balance sheets of the Company’s unconsolidated joint ventures are as follows: | | | December 31, 2017 | | December 31, 2016 | | December 31, 2020 | | December 31, 2019 | | (in thousands) | | (in thousands) | ASSETS | | | | ASSETS | | Real estate and development in process, net | $ | 1,768,996 |
| | $ | 1,519,217 |
| | Real estate and development in process, net (1) | | Real estate and development in process, net (1) | $ | 4,708,571 | | | $ | 3,904,400 | | Other assets | 367,743 |
| | 297,263 |
| Other assets | 531,071 | | | 502,706 | | Total assets | $ | 2,136,739 |
| | $ | 1,816,480 |
| Total assets | $ | 5,239,642 | | | $ | 4,407,106 | | LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY | | | | LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY | | | | Mortgage and notes payable, net | $ | 1,437,440 |
| | $ | 865,665 |
| Mortgage and notes payable, net | $ | 2,637,911 | | | $ | 2,218,853 | | Other liabilities | 99,215 |
| | 67,167 |
| | Other liabilities (2) | | Other liabilities (2) | 650,433 | | | 749,675 | | Members’/Partners’ equity | 600,084 |
| | 883,648 |
| Members’/Partners’ equity | 1,951,298 | | | 1,438,578 | | Total liabilities and members’/partners’ equity | $ | 2,136,739 |
| | $ | 1,816,480 |
| Total liabilities and members’/partners’ equity | $ | 5,239,642 | | | $ | 4,407,106 | | Company’s share of equity | $ | 286,495 |
| | $ | 450,662 |
| Company’s share of equity | $ | 936,087 | | | $ | 591,905 | | Basis differentials (1) | 307,485 |
| | 302,449 |
| | Carrying value of the Company’s investments in unconsolidated joint ventures (2) | $ | 593,980 |
| | $ | 753,111 |
| | Basis differentials (3) | | Basis differentials (3) | 337,832 | | | 341,318 | | Carrying value of the Company’s investments in unconsolidated joint ventures (4) | | Carrying value of the Company’s investments in unconsolidated joint ventures (4) | $ | 1,273,919 | | | $ | 933,223 | |
_______________ | | (1) | This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials result from impairments of investments, acquisitions through joint ventures with no change in control and upon the transfer of assets that were previously owned by the Company into a joint venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level. At December 31, 2017 and 2016, there was an aggregate basis differential of approximately $322.5 million and $328.8 million, respectively, between the carrying value of the Company’s investment in the joint venture that owns Colorado Center and the joint venture’s basis in the assets and liabilities, which differential (excluding land) shall be amortized over the remaining lives of the related assets and liabilities. |
| | (2) | Investments with deficit balances aggregating approximately $25.9 million and $22.1 million at December 31, 2017 and 2016, respectively, have been reflected within Other Liabilities in the Company’s Consolidated Balance Sheets. |
(1)At December 31, 2020 and 2019, this amount included right of use assets - finance leases totaling approximately $248.9 million and $383.9 million, respectively, and right of use assets - operating leases totaling approximately $22.5 million and $12.1 million, respectively.
(2)At December 31, 2020 and 2019, this amount included lease liabilities - finance leases totaling approximately $388.7 million and $510.8 million, respectively, and lease liabilities - operating leases totaling approximately $29.0 million and $17.3 million, respectively. (3)This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials result from impairments of investments, acquisitions through joint ventures with no change in control and upon the transfer of assets that were previously owned by the Company into a joint venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level. At December 31, 2020 and 2019, there was an aggregate basis differential of approximately $307.3 million and $311.3 million, respectively, between the carrying value of the Company’s investment in the joint venture that owns Colorado Center and the joint venture’s basis in the assets and liabilities. At December 31, 2020, there was an aggregate basis differential of approximately $51.9 million between the carrying value of the Company’s investment in the joint venture that owns Gateway Commons and the joint venture’s basis in the assets and liabilities. At December 31, 2020, there was an aggregate basis differential of approximately $(52.2) million between the carrying value of the Company’s investment in the joint venture that owns Dock 72 and the joint venture’s basis in the assets and liabilities. These basis differentials (excluding land) will be amortized over the remaining lives of the related assets and liabilities. (4)Investments with deficit balances aggregating approximately $36.6 million and $22.4 million at December 31, 2020 and 2019, respectively, are reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.
The combined summarized statements of operations of the Company’s unconsolidated joint ventures are as follows: | | | | | | | | | | | | | | For the year ended December 31, | | 2017 | | 2016 | | 2015 | | (in thousands) | Total revenue (1) | $ | 222,517 |
| | $ | 177,182 |
| | $ | 155,642 |
| Expenses | | | | | | Operating | 90,542 |
| | 76,741 |
| | 65,093 |
| Depreciation and amortization | 57,079 |
| | 44,989 |
| | 36,057 |
| Total expenses | 147,621 |
| | 121,730 |
| | 101,150 |
| Operating income | 74,896 |
| | 55,452 |
| | 54,492 |
| Other expense | | | | | | Interest expense | (46,371 | ) | | (34,016 | ) | | (32,176 | ) | Net income | $ | 28,525 |
| | $ | 21,436 |
| | $ | 22,316 |
| | | | | | | Company’s share of net income (2) | $ | 18,439 |
| | $ | 9,873 |
| | $ | 22,031 |
| Basis differential (3) | (7,207 | ) | | (1,799 | ) | | 739 |
| Income from unconsolidated joint ventures | $ | 11,232 |
| | $ | 8,074 |
| | $ | 22,770 |
| | | | | | | Gain on sale of investment in unconsolidated joint venture | $ | — |
| | $ | 59,370 |
| | $ | — |
|
| | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | | | 2020 | | 2019 | | 2018 | | | | | | (in thousands) | Total revenue (1) | | | | | $ | 319,560 | | | $ | 322,817 | | | $ | 271,951 | | Expenses | | | | | | | | | | Operating | | | | | 144,347 | | | 122,992 | | | 106,610 | | Transaction costs | | | | | 1,027 | | | 1,000 | | | 0 | | Depreciation and amortization (2) | | | | | 141,853 | | | 102,296 | | | 103,079 | | Total expenses | | | | | 287,227 | | | 226,288 | | | 209,689 | | Other income (expense) | | | | | | | | | | Interest expense | | | | | (98,051) | | | (84,409) | | | (71,308) | | Gains on sales of real estate (3) | | | | | 11,737 | | | 32,706 | | | 16,951 | | Net income (loss) | | | | | $ | (53,981) | | | $ | 44,826 | | | $ | 7,905 | | | | | | | | | | | | Company’s share of net income (loss) | | | | | $ | (16,256) | | | $ | 24,423 | | | $ | 8,084 | | Impairment loss on investment (4) | | | | | (60,524) | | | 0 | | | 0 | | Basis differential (3)(4)(5) | | | | | (8,330) | | | 22,169 | | | (5,862) | | (Loss) income from unconsolidated joint ventures | | | | | $ | (85,110) | | | $ | 46,592 | | | $ | 2,222 | |
_______________ | | (1) | Includes straight-line rent adjustments of approximately $21.7 million, $18.1 million and $3.9 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
| | (2) | During the year ended December 31, 2015, the Company received a distribution of approximately $24.5 million, which was generated from the excess loan proceeds from the refinancing of 901 New York Avenue’s mortgage loan to a new 10-year mortgage loan totaling $225.0 million. The Company’s allocation of income and distributions for the year ended December 31, 2015 was not proportionate to its nominal ownership interest as a result of the achievement of specified investment return thresholds, as provided for in the joint venture agreement. |
| | (3) | Includes straight-line rent adjustments of approximately $1.9 million and $1.4 million for the years ended December 31, 2017 and 2016, respectively. Also includes net above-/below-market rent adjustments of approximately $2.9 million and $0.9 million for the years ended December 31, 2017 and 2016, respectively. |
On July 10, 2017,(1)Includes straight-line rent adjustments of approximately $(10.1) million, $32.4 million and $15.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. Due primarily to the impact of COVID-19, for the year ended December 31, 2020, write-offs of accounts receivable and accrued rent balances totaled approximately $51.7 million.
(2)During the year ended December 31, 2018, the joint venture that owns Metropolitan Square in Washington, DC, commenced a renovation project and recorded accelerated depreciation expense of approximately $22.4 million related to the remaining book value of the assets to be replaced. The Company’s share of the accelerated depreciation expense totaled approximately $4.5 million. (3)For the year ended December 31, 2019, represents the gain on sale of 540 Madison Avenue recognized by the joint venture. During 2008, the Company acquiredrecognized an additional 0.2% interestother-than-temporary impairment loss on its investment in the unconsolidated joint venture resulting in a basis differential between the carrying value of the Company’s investment in the joint venture and the joint venture’s basis in the assets and liabilities of the property. As a result of the historical basis difference, the Company recognized a gain on sale of real estate totaling approximately $47.2 million for the year ended December 31, 2019, which consists of its share of the gain on sale reported by the joint venture as well as an adjustment for the basis differential. The gain on sale of real estate is included in Income from Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations. (4)During the year ended December 31, 2020, the Company recognized an other-than-temporary impairment loss on its investment in the unconsolidated joint venture that owns Colorado Center locatedDock 72 in Santa Monica, California forBrooklyn, New York totaling approximately $60.5 million. (5)Includes straight-line rent adjustments of approximately $1.8 million, $2.1 million in cash. Following the acquisition, the Company owns a 50% interest in the joint venture. The Company continues to accountand $2.4 million for the joint venture under the equity method of accounting as there were no changes to the rights of the members as a result of the acquisition. On July 28, 2017, the unconsolidated joint venture obtained mortgage financing collateralized by the property totaling $550.0 million. The mortgage financing bears interest at a fixed rate of 3.56% per annumyears ended December 31, 2020, 2019 and matures on August 9, 2027. The loan requires interest-only payments during the 10-year term of the loan, with the entire principal amount due at maturity. The joint venture distributed to the partners the2018, respectively. Also includes net proceeds from the financing totaling $502.0 million, of which the Company’s share was $251.0 million. Colorado Center is a six-building office complex that sits on a 15-acre site and contains an aggregateabove-/below-market rent adjustments of approximately 1,118,000 net rentable square feet with an underground parking garage$0.9 million, $1.7 million and $1.6 million for 3,100 vehicles.the years ended December 31, 2020, 2019 and 2018, respectively. On August 7, 2017,January 28, 2020, the Company entered into a joint venture with a third party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California. The Bernstein Companies to developCompany contributed its 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately 733,000$350.0 million for its 50% interest in the joint venture (See Note 3). 601, 611 and 651 Gateway consist of three Class A office properties aggregating approximately 768,000 net rentable square foot (subjectfeet. The partner contributed 3 properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $69.2 million in the future for its 50% ownership interest in the joint venture. As a result of the partner’s deferred contribution, the Company had an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by the Company and 51% by its partner.
On February 20, 2020, a joint venture in which the Company has a 55% interest acquired the land underlying the ground lease at its Platform 16 property located in San Jose, California for a purchase price totaling approximately $134.8 million. The joint venture had previously made a deposit totaling $15.0 million, which was credited against the purchase price. Platform 16 consists of a parcel of land totaling approximately 5.6 acres that is expected to adjustment basedsupport the development of approximately 1.1 million square feet of commercial office space. On June 9, 2020, a joint venture in which the Company has a 20% interest refinanced with a new lender the mortgage loan collateralized by its Metropolitan Square property located in Washington, DC. The outstanding balance of the loan totaled approximately $155.9 million, bore interest at a fixed rate of 5.75% per annum and was scheduled to mature on finalized building design) build-to-suit Class A office buildingAugust 5, 2020. The new mortgage loan totaling $325.0 million, of which $288.0 million was advanced at closing, bears interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.65%, plus (2) 4.75% per annum, and below-grade parking garage at 7750 Wisconsin Avenue in Bethesda, Maryland.matures on July 7, 2022, with 2, 1-year extension options, subject to certain conditions. The joint venture entered into a leasean interest rate cap agreement with an affiliate of Marriott International, Inc. under which Marriott will lease 100% of the office building and garage for a term of 20 years, and the building will serve as Marriott’s new worldwide headquarters. Marriott has agreedfinancial institution to fund 100% of the related tenant improvement costs and leasing commissions for the office building. The Company will serve as co-development manager for the venture and expectslimit its exposure to commence construction in 2018. The Company and The Bernstein Companies each own a 50% interestincreases in the LIBOR at a cap of 3.00% per annum on a notional amount of $325.0 million through July 7, 2022. The joint venture. For its initial contribution, The Bernstein Companies contributed land with an initial fair value of $72.0venture distributed excess loan proceeds from the new mortgage loan totaling approximately $112.7 million, and cash and improvements aggregating approximately $4.9 million. The Company contributed cash and improvements aggregating approximately $20.8 million for its initial contribution, of which $11.0 million wasthe Company’s share totaled approximately $22.5 million. Metropolitan Square is a Class A office property with approximately 654,000 net rentable square feet.
distributed to The Bernstein Companies. In addition, the Company was required to fund $25.0 million into an escrow account to be used by the joint venture to fund future development costs. See also Note 10.
On September 6, 2017,June 25, 2020, a joint venture in which the Company has a 50% interest obtained construction financingcompleted the sale of Annapolis Junction Building Eight and 2 land parcels located in Annapolis, Maryland for a gross sale price of $47.0 million. Net cash proceeds totaled approximately $45.8 million after the payment of transaction costs. The Company recognized a gain on sale of real estate totaling approximately $5.8 million, which is included in Income (Loss) from Unconsolidated Joint Ventures in the accompanying Consolidated Statements of Operations. The joint venture distributed approximately $36.8 million of available cash and the net proceeds from the sale after the pay down of the mortgage loan, of which the Company’s share totaled approximately $18.4 million. Annapolis Junction Building Eight is an approximately 126,000 net rentable square foot Class A office property, which is vacant. The 2 land parcels will support the development of approximately 300,000 square feet of commercial office space with 1 parcel currently containing surface parking for approximately 511 vehicles. On June 25, 2020, in conjunction with the joint venture’s sale of Annapolis Junction Building Eight, the joint venture in which the Company has a total commitment50% interest modified the mortgage loan collateralized by Annapolis Junction Building Seven and Building Eight with the release of $204.6Annapolis Junction Building Eight as collateral under the loan in exchange for a principal pay down of approximately $16.1 million using a portion of the net proceeds from the sale of the property. At the time of the modification, the outstanding balance of the loan totaled approximately $34.5 million, bore interest at a variable rate equal to LIBOR plus 2.35% per annum and was scheduled to mature on June 30, 2020. The modified mortgage loan totaling approximately $18.4 million is collateralized by Annapolis Junction Building Seven, continues to bear interest at a variable rate equal to LIBOR plus 2.35% per annum and matures on March 25, 2021. Annapolis Junction Building Seven is a Class A office property with approximately 127,000 net rentable square feet located in Annapolis, Maryland. On July 23, 2020, the Company acquired a 50% interest in a joint venture entity that owns Beach Cities Media Campus, a 6.4-acre parcel of land located in El Segundo, California, for a purchase price of approximately $21.2 million. Beach Cities Media Campus is expected to support the development of approximately 275,000 square feet of Class A office space. On July 24, 2020, a joint venture in which the Company has a 50% interest completed and fully placed in-service Hub50House, an approximately 320,000 square foot project comprised of 440 residential units located in Boston, Massachusetts. On September 1, 2020, the Company entered into an agreement with its partner in the joint venture that owns 1265 Main Street located in Waltham, Massachusetts to (1) form additional joint ventures to own and develop a mixed-use property containing approximately 1,200,000 square feet to be developed in phases on an approximately 41-acre site adjacent to 1265 Main Street and (2) share the costs of certain offsite infrastructure improvements with its joint venture partner and other third-party abutting land owners. The Company will serve as the development manager and expects to own a 50% interest in each of the joint ventures. On September 30, 2020, a joint venture in which the Company has a 50% interest extended the mortgage loan collateralized by its HubMarket Square North property. At the time of the extension, the outstanding balance of the loan totaled approximately $114.2 million, bore interest at a fixed rate of 4.85% per annum and was scheduled to mature on Causeway development project.October 1, 2020. The construction financingextended loan was scheduled to mature on November 1, 2020. On October 30,
2020, the joint venture refinanced the mortgage loan. The new mortgage loan totals $125.0 million, bears interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.50%, plus (2) 2.30% per annum, and matures on November 10, 2025, with 1, 1-year extension option, subject to certain conditions. Market Square North is a Class A office property with approximately 418,000 net rentable square feet. On October 1, 2020, a joint venture in which the Company has a 50% interest completed and fully placed in-service Dock 72, a Class A office project with approximately 669,000 net rentable square feet located in Brooklyn, New York that is 33% leased. During December 2020, the Company recognized a non-cash impairment charge totaling approximately $60.5 million, which represented the other-than temporary decline in the fair value below the carrying value of the Company’s investment in the unconsolidated joint venture that owns Dock 72. The non-cash impairment charge was the result of an increase in costs, an extension of the projected period to fully lease the property and lower projected rental rates due to the COVID-19 pandemic, resulting in a current fair value that was less than the carrying value of the Company’s investment. The Company assessed the impairment and concluded that it was other than temporary. The Company determined that its valuation of the investment was categorized within Level 3 of the fair value hierarchy, as it utilized significant unobservable inputs in its assessment including an exit capitalization rate of 5.25%, a discount rate on the Company’s equity investment (the property is encumbered by mortgage debt) of 8.0% and an average lease commencement on currently vacant space of mid-2023. In addition, on December 14, 2020, the joint venture extended the mortgage loan collateralized by the property. At the time of the extension, the outstanding balance of the loan totaled approximately $198.6 million, bore interest at a variable rate equal to LIBOR plus 2.25% per annum and was scheduled to mature on December 18, 2020. The extended mortgage loan has a total commitment amount of $250.0 million, bears interest at an initial variable rate equal to (1) the greater of (x) LIBOR or (y) 0.25%, plus (2) 2.85% per annum and matures on September 6, 2021, with two, one-year extension options, subject to certain conditions. The Hub on Causeway is an approximately 385,000 net rentable square foot project containing retail and office space located in Boston, Massachusetts. In connection with the construction financing, the Company obtained the right to complete the construction of the garage underneath the project being developed by an affiliate of its joint venture partner and obtain funding from the garage construction lender. The Company agreed to guarantee completion of the garage to the construction lender and an affiliate of its partner agreed to reimburse the Company for the partner’s share of any payments made under the guarantee.December 18, 2023. On December 1, 2017,November 13, 2020, a joint venture in which the Company has a 50% interest commenced construction of a residential project aggregating approximately 320,000 square feet comprised of 440 residential units atextended the mortgage loan collateralized by its Hub on Causeway mixed-use development projectAnnapolis Junction Building Six property located in Boston, Massachusetts.Annapolis, Maryland. At the time of the extension, the outstanding balance of the loan totaled approximately $12.0 million, bore interest at a variable rate equal to LIBOR plus 2.00% per annum and was scheduled to mature on November 17, 2020. The extended mortgage loan has a total commitment amount of approximately $13.2 million, bears interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.50%, plus (2) 2.50% per annum and matures on November 16, 2021. Annapolis Junction Building Six is a Class A office property with approximately 119,000 net rentable square feet. 6.7. Mortgage Notes Payable, Net Mezzanine Notes Payable and Outside Members’ Notes Payable
The Company had outstanding mortgage notes payable totaling approximately $3.0 billion and $2.1$2.9 billion as of December 31, 20172020 and 2016, respectively,2019, each collateralized by one or more buildings and related land included in real estate assets. The mortgage notes payable are generally due in monthly installments and mature at various dates through June 9, 2027. Fixed rate mortgage notes payable totaled approximately $3.0 billion and $2.1$2.9 billion at December 31, 20172020 and 2016, respectively,2019, with contractual interest rates ranging from 3.43% to 7.69%6.94% per annum at December 31, 20172020 and 4.75% to 7.69% per annum at December 31, 20162019 (with a weighted-average interest rate of 3.78%3.72% and 5.59%3.73% per annum (excluding the mezzanine notes payable) at December 31, 20172020 and 2016,2019, respectively). There were no0 variable rate mortgage loans at December 31, 20172020 and 2016. On June 7, 2017, the Company’s consolidated entity in which it has a 60% ownership interest and that owns 767 Fifth Avenue (the General Motors Building) located in New York City completed the refinancing of the indebtedness that had been secured by direct and indirect interests in the property. The new mortgage financing has a principal amount of $2.3 billion, bears interest at a fixed interest rate of 3.43% per annum and matures on June 9, 2027. The loan requires monthly interest-only payments during the 10-year term of the loan, with the entire principal amount being due at maturity.
The refinanced indebtedness consisted of (1) mortgage loans payable collateralized by the property aggregating $1.3 billion, (2) mezzanine loans payable aggregating $306.0 million, (3) additional mezzanine loans payable aggregating $294.0 million and (4) member loans aggregating $450.0 million with outstanding accrued interest payable totaling approximately $425.0 million. The mortgage loans required monthly interest-only payments at a weighted-average fixed interest rate of 5.95% per annum and were scheduled to mature on October 7, 2017. The mezzanine loans required interest-only payments at a weighted-average fixed interest rate of 6.02% per annum and were scheduled to mature on October 7, 2017. In addition, a subsidiary of the consolidated entity had acquired a lender’s interest in certain other mezzanine loans assumed during the acquisition of the property having an aggregate principal amount of $294.0 million and a stated interest rate of 6.02% per annum for a purchase price of approximately $263.1 million in cash. These mezzanine loans payable had been eliminated in consolidation and were canceled upon the refinancing of the indebtedness. The member loans bore interest at a fixed rate of 11.0% per annum and were scheduled to mature on June 9, 2017. A portion of the original purchase price of the property was financed with loans from the members on a pro rata basis equal to their percentage interest in the consolidated entity. The Company had eliminated in consolidation its member loan totaling $270.0 million and its share of the related accrued interest payable of approximately $255.0 million at the date of the refinancing. The remaining outside members’ notes payable and related accrued interest payable totaling $180.0 million and approximately $170.0 million, respectively, at the date of the refinancing had been reflected as Outside Members’ Notes Payable and within Accrued Interest Payable, respectively, on the Company’s Consolidated Balance Sheets. The net proceeds from the new financing were used to repay all of the outstanding accrued interest payable on the member loans and a portion of the outstanding principal balance of the member loans totaling approximately $176.1 million. In connection with the refinancing, the members of the Company’s consolidated entity contributed the remaining balance of the member notes payable totaling approximately $273.9
million (of which the Company’s share of approximately $164.4 million had been eliminated in consolidation) to equity in the consolidated entity (See Note 11). There was no prepayment penalty associated with the repayments. The Company recognized a gain from early extinguishment of debt totaling approximately $14.6 million primarily consisting of the acceleration of the remaining balance related to historical fair value debt adjustments.
No mortgage loans at December 31, 2017 and one mortgage loan totaling approximately $1.3 billion at December 31, 2016 had been accounted for at its fair value on the date the mortgage loan was assumed in connection with the consolidation of real estate. The impact of recording mortgage loans at fair value resulted in a decrease to interest expense of approximately $19.6 million, $46.4 million and $55.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. The cumulative liability related to the fair value adjustment was $33.8 million at December 31, 2016 and is included in mortgage notes payable, net in the Consolidated Balance Sheets.2019.
Contractual aggregate principal payments of mortgage notes payable at December 31, 20172020 are as follows: | | | | | | Principal Payments | | (in thousands) | 2018 | $ | 18,633 |
| 2019 | 19,670 |
| 2020 | 20,766 |
| 2021 | 40,182 |
| 2022 | 614,710 |
| Thereafter | 2,300,000 |
| Total aggregate principal payments | 3,013,961 |
| Deferred financing costs, net | (34,680 | ) | Total carrying value of mortgage notes payable, net | $ | 2,979,281 |
|
7. Derivative Instruments and Hedging Activities
During the year ended December 31, 2015, Boston Properties Limited Partnership commenced a planned interest rate hedging program and entered into 17 forward-starting interest rate swap contracts that fixed the 10-year swap rate at a weighted-average rate of approximately 2.423% per annum on notional amounts aggregating $550.0 million. These interest rate swap contracts were entered into in advance of a financing with a target commencement date in September 2016 and maturity in September 2026. On August 17, 2016, in conjunction with Boston Properties Limited Partnership’s offering of its 2.750% senior unsecured notes due 2026, the Company terminated the forward-starting interest rate swap contracts and cash-settled the contracts by making cash payments to the counterparties aggregating approximately $49.3 million. The Company recognized approximately $0.1 million of losses on interest rate contracts during the year ended December 31, 2016 related to the partial ineffectiveness of the interest rate contracts. The Company is reclassifying into earnings, as an increase to interest expense, approximately $49.2 million (or approximately $4.9 million per year over the 10-year term of the 2.750% senior unsecured notes due 2026) of the amounts recorded in the Consolidated Balance Sheets within Accumulated Other Comprehensive Loss, which represents the effective portion of the applicable interest rate contracts.
In addition, 767 Fifth Partners LLC, which is a subsidiary of the consolidated entity in which the Company has a 60% interest and owns 767 Fifth Avenue (the General Motors Building) in New York City, entered into 16 forward-starting interest rate swap contracts (including two contracts entered into during the year ended December 31, 2016 with notional amounts aggregating $50.0 million) that fix the 10-year swap rate at a weighted-average rate of approximately 2.619% per annum on notional amounts aggregating $450.0 million. These interest rate swap contracts were entered into in advance of a financing with a target commencement date in June 2017 and maturity in June 2027. On April 24, 2017, the consolidated entity that owns 767 Fifth Avenue (the General Motors Building) located in New York City entered into an interest rate lock and commitment agreement with a group of lenders on a ten-year financing totaling $2.3 billion at a fixed interest rate of 3.43% per annum (See Note 6). In conjunction with the interest rate lock and commitment agreement, 767 Fifth Partners LLC terminated the forward-starting interest rate swap contracts and cash-settled the contracts by making cash payments to the counterparties aggregating approximately $14.4 million. 767 Fifth Partners LLC did not record any hedge ineffectiveness. The Company is
reclassifying into earnings, as an increase to interest expense, approximately $14.4 million (or approximately $1.4 million per year over the 10-year term of the financing) of the amounts recorded in the Consolidated Balance Sheets within Accumulated Other Comprehensive Loss, which represents the effective portion of the applicable interest rate contracts.
At December 31, 2017, there were no outstanding interest rate swap contracts. 767 Fifth Partners LLC’s interest rate swap contracts consisted of the following at December 31, 2016 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | Derivative Instrument | | Aggregate Notional Amount | | Effective Date | | Maturity Date | | Strike Rate Range | | Balance Sheet Location | | Fair Value | | | | | Low | | High | | | | | | | | | | | | | | | | Interest Rate Swaps | | $ | 350,000 |
| | June 7, 2017 | | June 7, 2027 | | 2.418 | % | - | 2.950 | % | | Other Liabilities | | $ | (8,773 | ) | Interest Rate Swaps | | 100,000 |
| | June 7, 2017 | | June 7, 2027 | | 2.336 | % | - | 2.388 | % | | Prepaid Expenses and Other Assets | | 509 |
| | | $ | 450,000 |
| | | | | | | | | | | | $ | (8,264 | ) |
Boston Properties Limited Partnership entered into the interest rate swap contracts designated and qualifying as cash flow hedges to reduce its exposure to the variability in future cash flows attributable to changes in the 10-year swap rate in contemplation of obtaining 10-year fixed-rate financing in September 2016. The Company’s 767 Fifth Partners LLC consolidated entity entered into the interest rate swap contracts designated and qualifying as cash flow hedges to reduce its exposure to the variability in future cash flows attributable to changes in the 10-year swap rate in contemplation of obtaining 10-year fixed-rate financing in June 2017. Boston Properties Limited Partnership has formally documented all of its relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. Boston Properties Limited Partnership also assesses and documents, both at the hedging instrument’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the hedged items. All components of the forward-starting interest rate swap contracts were included in the assessment of hedge effectiveness. The Company accounts for the effective portion of changes in the fair value of a derivative in accumulated other comprehensive loss and subsequently reclassifies the effective portion to earnings over the term that the hedged transaction affects earnings. The Company accounts for the ineffective portion of changes in the fair value of a derivative directly in earnings. The Company classifies cash flows related to derivative instruments within its Consolidated Statements of Cash Flows consistent with the nature of the hedged item.
The following table presents the location in the financial statements of the losses recognized related to the Company’s cash flow hedges for the years ended December 31, 2017, 2016 and 2015:
| | | | | | | | | | | | | | | | Year ended December 31, | | | 2017 | | 2016 | | 2015 | | | (in thousands) | Amount of loss related to the effective portion recognized in other comprehensive loss | | $ | (6,133 | ) | | $ | (47,144 | ) | | $ | (10,302 | ) | Amount of loss related to the effective portion subsequently reclassified to earnings (1) | | $ | (6,033 | ) | | $ | (3,751 | ) | | $ | (2,510 | ) | Amount of loss related to the ineffective portion and amount excluded from effectiveness testing | | $ | — |
| | $ | (140 | ) | | $ | — |
|
___________
| | (1) | During the year ended December 31, 2016, the Company accelerated the reclassification of amounts in other comprehensive loss to earnings as a result of the hedged forecasted transactions becoming probable not to occur. The accelerated amounts were a loss of approximately $0.2 million and are included in the table above. |
Boston Properties, Inc.
The following table reflects the changes in accumulated other comprehensive loss for the years ended December 31, 2017, 2016 and 2015follows (in thousands):
| | | | | | | Principal Payments | 2021 | $ | 17,276 | | 2022 | 614,710 | | 2023 | 0 | | 2024 | 0 | | 2025 | 0 | | Thereafter | 2,300,000 | | Total aggregate principal payments | 2,931,986 | | Deferred financing costs, net | (22,905) | | Total carrying value of mortgage notes payable, net | $ | 2,909,081 | |
| | | | | | Balance at December 31, 2014 | | $ | (9,304 | ) | Effective portion of interest rate contracts | | (10,302 | ) | Amortization of interest rate contracts | | 2,510 |
| Other comprehensive loss attributable to noncontrolling interests | | 2,982 |
| Balance at December 31, 2015 | | (14,114 | ) | Effective portion of interest rate contracts | | (47,144 | ) | Amortization of interest rate contracts | | 3,751 |
| Other comprehensive loss attributable to noncontrolling interests | | 5,256 |
| Balance at December 31, 2016 | | (52,251 | ) | Effective portion of interest rate contracts | | (6,133 | ) | Amortization of interest rate contracts | | 6,033 |
| Other comprehensive loss attributable to noncontrolling interests | | 1,922 |
| Balance at December 31, 2017 | | $ | (50,429 | ) |
Boston Properties Limited Partnership
The following table reflects the changes in accumulated other comprehensive loss for the years ended December 31, 2017, 2016 and 2015 (in thousands):
| | | | | | Balance at December 31, 2014 | | $ | (12,973 | ) | Effective portion of interest rate contracts | | (10,302 | ) | Amortization of interest rate contracts | | 2,510 |
| Other comprehensive loss attributable to noncontrolling interests in property partnership | | 2,428 |
| Balance at December 31, 2015 | | (18,337 | ) | Effective portion of interest rate contracts | | (47,144 | ) | Amortization of interest rate contracts | | 3,751 |
| Other comprehensive loss attributable to noncontrolling interests in property partnership | | 877 |
| Balance at December 31, 2016 | | (60,853 | ) | Effective portion of interest rate contracts | | (6,133 | ) | Amortization of interest rate contracts | | 6,033 |
| Other comprehensive loss attributable to noncontrolling interests in property partnership | | 2,128 |
| Balance at December 31, 2017 | | $ | (58,825 | ) |
8. Unsecured Senior Notes The following summarizes the unsecured senior notes outstanding as of December 31, 20172020 (dollars in thousands): | | | | | | | | | | | | | | Coupon/ Stated Rate | | Effective Rate(1) | | Principal Amount | | Maturity Date(2) | | | Coupon/ Stated Rate | | Effective Rate(1) | | Principal Amount | | Maturity Date(2) | | 10 Year Unsecured Senior Notes | 5.875 | % | | 5.967 | % | | $ | 700,000 |
| | October 15, 2019 | | 10 Year Unsecured Senior Notes | 5.625 | % | | 5.708 | % | | 700,000 |
| | November 15, 2020 | | 10 Year Unsecured Senior Notes | 4.125 | % | | 4.289 | % | | 850,000 |
| | May 15, 2021 | 10 Year Unsecured Senior Notes | 4.125 | % | | 4.289 | % | | $ | 850,000 | | | May 15, 2021 | (3) | 11 Year Unsecured Senior Notes | 3.850 | % | | 3.954 | % | | 1,000,000 |
| | February 1, 2023 | 11 Year Unsecured Senior Notes | 3.850 | % | | 3.954 | % | | 1,000,000 | | | February 1, 2023 | | 10.5 Year Unsecured Senior Notes | 3.125 | % | | 3.279 | % | | 500,000 |
| | September 1, 2023 | 10.5 Year Unsecured Senior Notes | 3.125 | % | | 3.279 | % | | 500,000 | | | September 1, 2023 | | 10.5 Year Unsecured Senior Notes | 3.800 | % | | 3.916 | % | | 700,000 |
| | February 1, 2024 | 10.5 Year Unsecured Senior Notes | 3.800 | % | | 3.916 | % | | 700,000 | | | February 1, 2024 | | 7 Year Unsecured Senior Notes | 3.200 | % | | 3.350 | % | | 850,000 |
| | January 15, 2025 | 7 Year Unsecured Senior Notes | 3.200 | % | | 3.350 | % | | 850,000 | | | January 15, 2025 | | 10 Year Unsecured Senior Notes | 3.650 | % | | 3.766 | % | | 1,000,000 |
| | February 1, 2026 | 10 Year Unsecured Senior Notes | 3.650 | % | | 3.766 | % | | 1,000,000 | | | February 1, 2026 | | 10 Year Unsecured Senior Notes | 2.750 | % | | 3.495 | % | | 1,000,000 |
| | October 1, 2026 | 10 Year Unsecured Senior Notes | 2.750 | % | | 3.495 | % | | 1,000,000 | | | October 1, 2026 | | 10 Year Unsecured Senior Notes | | 10 Year Unsecured Senior Notes | 4.500 | % | | 4.628 | % | | 1,000,000 | | | December 1, 2028 | | 10 Year Unsecured Senior Notes | | 10 Year Unsecured Senior Notes | 3.400 | % | | 3.505 | % | | 850,000 | | | June 21, 2029 | | 10.5 Year Unsecured Senior Notes | | 10.5 Year Unsecured Senior Notes | 2.900 | % | | 2.984 | % | | 700,000 | | | March 15, 2030 | | 10.75 Year Unsecured Senior Notes | | 10.75 Year Unsecured Senior Notes | 3.250 | % | | 3.343 | % | | 1,250,000 | | | January 30, 2031 | | Total principal | | | | | 7,300,000 |
| | Total principal | | 9,700,000 | | | Net unamortized discount | | | | | (17,894 | ) | | Net unamortized discount | | (16,034) | | | Deferred financing costs, net | | | | | (34,776 | ) | | Deferred financing costs, net | | (44,679) | | | Total | | | | | $ | 7,247,330 |
| | Total | | $ | 9,639,287 | | |
_______________ | | (1) | Yield on issuance date including the effects of discounts on the notes, settlements of interest rate contracts and the amortization of financing costs. |
| | (2) | No principal amounts are due prior to maturity. |
(1)Yield on issuance date including the effects of discounts on the notes, settlements of interest rate contracts and the amortization of financing costs. (2)No principal amounts are due prior to maturity. (3)See Note 18. On December 4, 2017,May 5, 2020, Boston Properties Limited Partnership completed a public offering of $850.0 million$1.25 billion in aggregate principal amount of its 3.200%3.250% unsecured senior notes due 2025.2031. The notes were priced at 99.757%99.850% of the principal amount to yield an effective rate (including financing fees) of approximately 3.350%3.343% per annum to maturity. The notes will mature on January 15, 2025,30, 2031, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $841.1 million$1.24 billion, after deducting underwriting discounts and transaction expenses. On December 17, 2017, Boston Properties Limited Partnership completed the redemption of $850.0 million in aggregate principal amount of its 3.700% senior notes due November 15, 2018. The redemption price was approximately $865.5 million. The redemption price included approximately $2.8 million of accrued and unpaid interest to, but not including, the redemption date. Excluding the accrued and unpaid interest, the redemption price was approximately 101.49% of the principal amount being redeemed. The Company recognized a loss from early extinguishment of debt totaling approximately $13.9 million, which amount included the payment of the redemption premium totaling approximately $12.7 million.
The indenture relating to the unsecured senior notes contains certain financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 50%, (3) an interest coverage ratio of greater than 1.50, and (4) an unencumbered asset value of not less than 150% of unsecured debt. At December 31, 2017,2020, Boston Properties Limited Partnership was in compliance with each of these financial restrictions and requirements. 9. Unsecured Credit Facility On April 24, 2017, Boston Properties Limited Partnership amended and restated its unsecured revolving credit agreement (as amended and restated, the “2017 Credit Facility”). Among other things, the 2017 Credit Facility (1) increased the total commitment of the revolving line of credit (the “Revolving Facility”) from $1.0 billion to $1.5 billion, (2) extended the maturity date from July 26, 2018 to April 24, 2022, (3) reduced the per annum variable interest rates, and (4) added a $500.0 million delayed draw term loan facility (the “Delayed Draw Facility”) that permitspermitted Boston Properties Limited Partnership until the first anniversary of the closing date, to draw upon up to four times a minimum of $50.0 million (or, if less, the remaining unused delayed draw term commitments),it provided that amounts drawn under the Delayed Draw Facility and subsequently repaid may not be borrowed again. In addition, Boston Properties Limited Partnership may increase the total commitment under the 2017 Credit Facility by up to
$500.0 $500.0 million through increases in the Revolving Facility or the Delayed Draw Facility, or both, subject to syndication of the increase and other conditions.
On April 24, 2018, Boston Properties Limited Partnership exercised its option to draw $500.0 million on its Delayed Draw Facility. The Delayed Draw Facility bears interest at a variable rate equal to LIBOR plus 0.95% per annum based on Boston Properties Limited Partnership’s current credit rating and matures on April 24, 2022.
At Boston Properties Limited Partnership’s option, loans under the Revolving Facility and Delayed Draw Facility will bear interest at a rate per annum equal to (1) (a) in the case of loans denominated in Dollars, Euro or Sterling, LIBOR, and (b) in the case of loans denominated in Canadian Dollars, CDOR, in each case, plus a margin ranging from 77.5 to 155 basis points for the Revolving Commitment and 85 to 175 basis points for the Delayed Draw Facility, based on Boston Properties Limited Partnership’s credit rating or (2) an alternate base rate equal to the greatest of (x) the Administrative Agent’s prime rate, (y) the Federal Funds rate plus 0.50% or (z) LIBOR for a one-month period plus 1.00%, in each case, plus a margin ranging from 0 to 55 basis points for the Revolving Facility and 0 to 75 basis points for the Delayed Draw Facility, based on Boston Properties Limited Partnership’s credit rating. The 2017 Credit Facility also contains a competitive bid option for up to 65% of the Revolving Facility that allows banks that are part of the lender consortium to bid to make loan advances to Boston Properties Limited Partnership at a reduced interest rate. In addition, Boston Properties Limited Partnership is obligated to pay (1) in quarterly installments a facility fee on the total commitment under the Revolving Facility at a rate per annum ranging from 0.10% to 0.30% based on Boston Properties Limited Partnership’s credit rating, (2) an annual fee on the undrawn amount of each letter of credit equal to the LIBOR margin on the Revolving Facility and (3) a fee on the unused commitments under the Delayed Draw Facility equal to 0.15% per annum. Based on Boston Properties Limited Partnership’s December 31, 20172020 credit rating, (1) the applicable Eurocurrency margins for the Revolving Facility and Delayed Draw Facility are 87.5 basis points0.875% and 95 basis points,0.95% per annum, respectively, (2) the alternate base rate margin is zero basis points for each of the Revolving Facility and Delayed Draw Facility and (3) the facility fee on the Revolving Facility commitment is 0.15% per annum. At December 31, 2017 there was $45.02020 and 2019, Boston Properties Limited Partnership had $500.0 million of borrowings outstanding on the 2017 Credit Facility. At December 31, 2016, there were nounder its Delayed Draw Facility and 0 amounts outstanding on the credit facility.under its Revolving Facility. The 2017 Credit Facility contains customary representations and warranties, affirmative and negative covenants and events of default provisions, including failure to pay indebtedness, breaches of covenants, and bankruptcy and other insolvency events, which could result in the acceleration of all amounts and cancellation of all commitments outstanding under the Credit Agreement. Among other covenants, the 2017 Credit Facility requires that Boston Properties Limited Partnership maintain on an ongoing basis: (1) a leverage ratio not to exceed 60%, however, the leverage ratio may increase to no greater than 65% provided that it is reduced back to 60% within one year, (2) a secured debt leverage ratio not to exceed 55%, (3) a fixed charge coverage ratio of at least 1.40, (4) an unsecured debt leverage ratio not to exceed 60%, however, the unsecured debt leverage ratio may increase to no greater than 65% provided that it is reduced to 60% within one year, (5) an unsecured debt interest coverage ratio of at least 1.75 and (6) limitations on permitted investments. At December 31, 2017,2020, Boston Properties Limited Partnership was in compliance with each of these financial and other covenant requirements. 10. Commitments and Contingencies General In the normal course of business, the Company guarantees its performance of services or indemnifies third parties against its negligence. In addition, in the normal course of business, the Company guarantees to certain tenants the obligations of its subsidiaries for the payment of tenant improvement allowances and brokerage commissions in connection with their leases and limited costs arising from delays in delivery of their premises. The Company has letter of credit and performance obligations related to lender and development requirements that total approximately $9.1 million.$20.0 million at December 31, 2020. Certain of the Company’s joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. With limited exception, under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners. From time to time, under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, either the Company or its partners willmay be entitled to an additional promoted interest or payments. See also Note 11. From time to time, the Company (or ventures in which the Company has an ownership interest) has agreed, and may in the future agree, to (1) guarantee portions of the principal, interest and other amounts in connection with their borrowings, (2) provide customary environmental indemnifications and nonrecourse carve-outs (e.g.,
guarantees against fraud, misrepresentation and bankruptcy) in connection with their borrowings and (3) provide guarantees to lenders, tenants and other third parties for the completion of development projects. The Company has agreements with its outside partners whereby the partners agree to reimburse the joint venture for their share of
any payments made under the guarantee. In some cases, the Company earns a fee from the applicable joint venture for providing the guarantee. In connection with the refinancing of 767 Fifth Avenue’s (the General Motors Building) secured loan by the Company’s consolidated joint venture entity, 767 Venture, LLC, the Company guaranteed the consolidated entity’s obligation to fund various reserves for tenant improvement costs and allowances, leasing commissions and free rent obligations in lieu of cash deposits. As of December 31, 2017,2020, the maximum funding obligation under the guarantee was approximately $193.4$30.6 million. The Company earns a fee from the joint venture for providing the guarantee and has an agreement with the outside partners to reimburse the joint venture for their share of any payments made under the guarantee. As of December 31, 2017,2020, no amounts related to the guarantee are recorded as liabilities in the Company’s consolidated financial statements.
Pursuant to the lease agreement with Marriott, the Company has guaranteed the completion of the office building and parking garage on behalf of its 7750 Wisconsin Avenue joint venture and has also agreed to provide anyprovided a financing guaranty that may beas required with respect to the third-party construction financing. The Company earns a feefees from the joint venture for providing the guarantees and any amounts the Company pays under the guarantee(s) will be deemed to be capital contributions by the Company to the joint venture. The Company has also agreed to fund construction costs through capital contributions to the joint venture in the event of unavailability or insufficiency of third-party construction financing. In addition, the Company has guaranteed to Marriott, as hotel manager, the completion of a hotel being developed by an affiliate of The Bernstein Companies (the Company’s partner in the 7750 Wisconsin Avenue joint venture) adjacent to the office property, for which the Company earns a fee from the affiliate of The Bernstein Companies. In addition, the Company entered into agreements with affiliates of The Bernstein Companies whereby the Company could be required to act as a mezzanine and/or mortgage lender and finance the construction of the hotel property. An affiliate of The Bernstein Companies exercised its option to borrow $10.0 million from the Company under such agreements, which financing was provided by the Company on June 1, 2020. The financing bears interest at a fixed rate of 8.00% per annum, compounded monthly, and matures on the fifth anniversary of the date on which the base building of the affiliate of The Bernstein Companies’ hotel property is substantially completed. The financing is collateralized by a pledge of the partner’s equity interest in the joint venture that owns and is developing 7750 Wisconsin Avenue. To secure such financing arrangements, affiliates of The Bernstein Companies are required to provide certain security, which varies depending on the specific loan, by pledges of their equity interest in the office property, a fee mortgage on the hotel property, or both. As of December 31, 2017, no2020, 0 amounts related to the contingent aspect of any of the guarantees are recorded as liabilities in the Company’s consolidated financial statements. See also Note 5. In connection with the sale and development of the Company’s 6595 Springfield Center Drive development project, the Company has guaranteed the completion of the project and the payment of certain cost overruns in accordance with the development management agreement with the buyer. Although the project has been sold and the lease with the Federal Government tenant has been assigned to the buyer, pursuant to the terms of the Federal Government lease, the Federal Government tenant is not obligated to release the prior owner/landlord from such landlord’s obligations under the lease until completion of the construction. As a result, the entity which previously owned the land remains liable to the Federal Government tenant for the completion of the construction obligations under the lease. The buyer is obligated to fund the balance of the costs to meet such construction obligations, subject to the Company’s obligation to fund cost overruns (if any), as noted above. An affiliate of the buyer has provided a guaranty of the obligations of the buyer to fund such construction costs and the buyer has agreed to use commercially reasonable efforts to require the construction lender to provide certain remedies to the Company in the event the buyer does not fund such construction obligations. As of December 31, 2020, 0 amounts related to the contingent aspect of the guarantee are recorded as a liability in the Company’s consolidated financial statements. In connection with the redevelopment of the Company’s 325 Main Street property located in Cambridge, Massachusetts, the Company is required, pursuant to the local zoning ordinance, to commence construction of a residential building of at least 200,000 square feet with 25% of the project designated as income-restricted (with a minimum of 20% of the square footage devoted to home ownership units) prior to the occupancy of the 325 Main Street property, which is expected to occur during the third quarter of 2022. 325 Main Street consisted of an approximately 115,000 net rentable square foot Class A office property that was demolished and is being developed into an approximately 420,000 net rentable square foot Class A office property, including approximately 41,000 net rentable square feet of retail space.
In 2009, the Company filed a general unsecured creditor’s claim against Lehman Brothers, Inc. for approximately $45.3 million related to its rejection of a lease at 399 Park Avenue in New York City. On January 10, 2014, the trustee for the liquidation of the business of Lehman Brothers allowed the Company’s claim in the amount of approximately $45.2 million. During 2014,2020, the Company received an initiala distribution totaling approximately $7.7$0.1 million. During the years ended December 31, 2017, 2016 and 2015,2014 through 2018, the Company received distributions aggregating approximately $0.4$18.0 million, $1.4 million and $8.1 million, respectively, which are included in Base Rent in the Consolidated Statements of Operations, leaving a remaining claim of approximately $27.6$27.1 million. The Company will continue to evaluate whether to attempt to sell the remaining claim or wait until the trustee distributes proceeds from the Lehman Brothers estate. Given the inherent uncertainties in bankruptcy proceedings, there can be no assurance as to the timing or amount of additional proceeds, if any, that the Company may ultimately realize on the remaining claim, whether by sale to a third party or by one or more distributions from the trustee. Accordingly, the Company has not recorded any estimated recoveries associated with this gain contingency within its Consolidated Financial Statements at December 31, 2017.2020. Concentrations of Credit Risk Management of the Company performs ongoing credit evaluations of tenants and may require tenants to provide some form of credit support such as corporate guarantees and/or other financial guarantees. Although the Company’s properties are geographically diverse and the tenants operate in a variety of industries, to the extent the Company has a significant concentration of rental revenue from any single tenant, the inability of that tenant to make its lease payments could have an adverse effect on the Company. Some potential losses are not covered by insurance.Insurance
The Company carries insurance coverage on its properties, including those under development, of types and in amounts and with deductibles that it believes are in line with coverage customarily obtained by owners of similar properties. Certain properties owned in joint ventures with third parties are insured by the third party partner with insurance coverage of types and in amounts and with deductibles the Company believes are in line with coverage customarily obtained by owners of similar properties. In response to the uncertainty in the insurance market
following the terrorist attacks of September 11, 2001, the Federal Terrorism Risk Insurance Act (as amended, “TRIA”) was enacted in November 2002 to require regulated insurers to make available coverage for “certified” acts of terrorism (as defined by the statute). The expiration date of TRIA was extended to December 31, 2014 by the Terrorism Risk Insurance Program Reauthorization Act of 2007 and further extended to December 31, 2020 by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“TRIPRA”), and the Company can provide no assurance that it will be extended further. Currently, the Company’s property insurance program per occurrence limits are $1.0 billion for its portfolio insurance program, including coverage for acts of terrorism other than nuclear, biological, chemical or radiological terrorism (“Terrorism Coverage”). The Company also carries $250 million of Terrorism Coverage for 601 Lexington Avenue, New York, New York (“601 Lexington Avenue”) in excess of the $1.0 billionof coverage in the Company’s property insurance program. Certain properties, including the General Motors Building located at 767 Fifth Avenue in New York, New York (“767 Fifth Avenue”), are currently insured in separate insurance programs. The property insurance program per occurrence limits for 767 Fifth Avenue are $1.625 billion, including Terrorism Coverage. The Company also currently carries nuclear, biological, chemical and radiological terrorism insurance coverage for acts of terrorism certified under TRIAthe Federal Terrorism Risk Insurance Act (as amended, “TRIA”) (“NBCR Coverage”), which is provided by IXP as a direct insurer, for the properties in the Company'sCompany’s portfolio, including 767 Fifth Avenue, but excluding certain other properties owned in joint ventures with third parties or which the Company manages. The per occurrence limit for NBCR Coverage is $1.0 billion. Under TRIA, after the payment of the required deductible and coinsurance, the NBCR Coverage provided by IXP is backstopped by the Federal Government if the aggregate industry insured losses resulting from a certified act of terrorism exceed a “program trigger.” In 2017, theThe program trigger was $140is $200 million, the coinsurance is 20% and the coinsurance was 17%, however, both will increase in subsequent years pursuantdeductible is 20% of the premiums earned by the insurer for the year prior to TRIPRA.a claim. If the Federal Government pays out for a loss under TRIA, it is mandatory that the Federal Government recoup the full amount of the loss from insurers offering TRIA coverage after the payment of the loss pursuant to a formula in TRIPRA.TRIA. The Company may elect to terminate the NBCR Coverage if the Federal Government seeks recoupment for losses paid under TRIA, if TRIA is not extended after its expiration on December 31, 2027, if there is a change in its portfolio or for any other reason. The Company intends to continue to monitor the scope, nature and cost of available terrorism insurance and maintain terrorism insurance in amounts and on terms that are commercially reasonable.insurance.
The Company also currently carries earthquake insurance on its properties located in areas known to be subject to earthquakes in an amount and subject to self-insurance that the Company believes is commercially reasonable.earthquakes. In addition, this insurance is subject to a deductible in the amount of 3% of the value of the affected property. Specifically, the Company currently carries earthquake insurance which covers its San Francisco (including Salesforce Tower) and Los Angeles regions with a $240 million (increased from $170 millionon March 1, 2017) per occurrence limit, and a $240 million (increased from $170 million on March 1, 2017) annual aggregate limit, $20 million of which is provided by IXP, as a direct insurer. Prior to March 1, 2017, the builders risk policy maintained for the development of Salesforce Tower in San Francisco included a $60 million per occurrence and annual aggregate limit of earthquake coverage. The amount of the Company’s earthquake insurance coverage may not be sufficient to cover losses from earthquakes. In addition, the amount of earthquake coverage could impact the Company’s ability to finance properties subject to earthquake risk. The Company may discontinue earthquake insurance or change the structure of its earthquake insurance program on some or all of its properties in the future if the premiums exceed the Company’s estimation of the value of the coverage. IXP, a captive insurance company which is a wholly-owned subsidiary of the Company, acts as a direct insurer with respect to a portion of the Company’s earthquake insurance coverage for its Greater San Francisco and Los Angeles properties and the Company’s NBCR Coverage. Insofar as the Company owns IXP, it is responsible for its liquidity and capital resources, and the accounts of IXP are part of the Company’s consolidated financial statements. In particular, if a loss occurs which is covered by the Company’s NBCR Coverage but is less than the applicable
program trigger under TRIA, IXP would be responsible for the full amount of the loss without any backstop by the Federal Government. IXP would also be responsible for any recoupment charges by the Federal Government in the event losses are paid out and its insurance policy is maintained after the payout by the Federal Government. If the Company experiences a loss and IXP is required to pay under its insurance policy, the Company would ultimately record the loss to the extent of the required payment. Therefore, insurance coverage provided by IXP should not be considered as the equivalent of third-party insurance, but rather as a modified form of self-insurance. In addition, Boston Properties Limited Partnership has issued a guarantee to cover liabilities of IXP in the amount of $20.0 million. The mortgages onDue to the current COVID-19 pandemic, the Company anticipates the possibility of business interruption, loss of lease revenue and/or other associated expenses related to the Company’s properties typically contain requirements concerningoperations across its portfolio. Because this is an ongoing situation it is not yet possible to quantify the financial ratingsCompany’s losses and expenses, which continue to develop. Because of the insurers who provide policies covering the property. The Company provides the lenders on a regular basis with the identitycomplexity of the insurance companies in the Company’s insurance programs. The ratings of somepolicies and limited precedent for claims being made related to pandemics, it is not yet possible to determine if such losses and expenses will be covered by the Company’s insurance policies. Therefore, at this time, the Company is providing notice to the applicable insurers of the Company’s insurers are below the rating requirementspotential for claims in some oforder to protect the Company’s loan agreements and the lenders
for these loans could attempt to claim that an event of default has occurredrights under the loan. The Company believes it could obtain insurance with insurers which satisfy the rating requirements. Additionally, in the future, the Company’s ability to obtain debt financing secured by individual properties, or the terms of such financing, may be adversely affected if lenders generally insist on ratings for insurers or amounts of insurance which are difficult to obtain or which result in a commercially unreasonable premium. There can be no assurance that a deficiency in the financial ratings of one or more of the Company’s insurers will not have a material adverse effect on the Company.its policies.
The Company continues to monitor the state of the insurance market in general, and the scope and costs of coverage for acts of terrorism, and California earthquake risk and pandemics, in particular, but the Company cannot anticipate what coverage will be available on commercially reasonable terms in future policy years. There are other types of losses, such as from wars, for which the Company cannot obtain insurance at all or at a reasonable cost. With respect to such losses and losses from acts of terrorism, earthquakes or other catastrophic events, if the Company experiences a loss that is uninsured or that exceeds policy limits, the Company could lose the capital invested in the damaged properties, as well as the anticipated future revenues from those properties. Depending on the specific circumstances of each affected property, it is possible that the Company could be liable for mortgage indebtedness or other obligations related to the property. Any such loss could materially and adversely affect the Company’s business and financial condition and results of operations. Legal Matters The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. Management believes that the final outcome of such matters will not have a material adverse effect on the financial position, results of operations or liquidity of the Company. State and Local Tax Matters Because Boston Properties, Inc. is organized and qualifies as a REIT, it is generally not subject to federal income taxes, but is subject to certain state and local taxes. In the normal course of business, certain entities through which the Company owns real estate either have undergone, or are currently undergoing, tax audits. Although the Company believes that it has substantial arguments in favor of its positions in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. Collectively, tax deficiency notices received to date from the jurisdictions conducting the ongoing audits have not been material. However, there can be no assurance that future audits will not occur with increased frequency or that the ultimate result of such audits will not have a material adverse effect on the Company’s results of operations. Environmental Matters It is the Company’s policy to retain independent environmental consultants to conduct or update Phase I environmental assessments (which generally do not involve invasive techniques such as soil or ground water sampling) and asbestos surveys in connection with the Company’s acquisition of properties. These pre-purchase environmental assessments have not revealed environmental conditions that the Company believes will have a material adverse effect on its business, assets, financial condition, results of operations or liquidity, and the Company is not otherwise aware of environmental conditions with respect to its properties that the Company believes would have such a material adverse effect. However, from time to time environmental conditions at the Company’s properties have required and may in the future require environmental testing and/or regulatory filings, as well as remedial action. InFor example, in February 1999, the Company (through a joint venture) acquired from Exxon Corporation a property in Massachusetts that was formerly used as a petroleum bulk storage and distribution facility and was known by the state regulatory authority to contain soil and groundwater contamination. The Company developed an office park on the property. The Company engaged a specially licensed environmental consultant to oversee the
management of contaminated soil and groundwater that was disturbed in the course of construction. Under the property acquisition agreement, Exxon agreed to (1) bear the liability arising from releases or discharges of oil and hazardous substances which occurred at the site prior to the Company’s ownership, (2) continue monitoring and/or remediating such releases and discharges as necessary and appropriate to comply with applicable requirements, and (3) indemnify the Company for certain losses arising from preexisting site conditions. Any indemnity claim may be subject to various defenses and contractual limitations, including time limits, and there can be no assurance that the amounts paid under the indemnity, if any, would be sufficient to cover the liabilities arising from any such releases and discharges.
Environmental investigations at some of the Company’s properties and certain properties owned by affiliates of the Company have identified groundwater contamination migrating from off-site source properties. In each case the Company engaged a licensed environmental consultant to perform the necessary investigations and assessments and to prepare any required submittals to the regulatory authorities. In each case the environmental consultant concluded that the properties qualify under the regulatory program or the regulatory practice for a status which eliminates certain deadlines for conducting response actions at a site. The Company also believes that these properties qualify for liability relief under certain statutory provisions or regulatory practices regarding upgradient releases. Although the Company believes that the current or former owners of the upgradient source properties may bear responsibility for some or all of the costs of addressing the identified groundwater contamination, the Company will take such further response actions (if any) that it deems necessary or advisable. Other than periodic testing at some of these properties, no such additional response actions are anticipated at this time. Some of the Company’s properties and certain properties owned by the Company’s affiliates are located in urban, industrial and other previously developed areas where fill or current or historical uses of the areas have caused site contamination. Accordingly, it is sometimes necessary to institute special soil and/or groundwater handling procedures and/or include particular building design features in connection with development, construction and other property operations in order to achieve regulatory closure and/or ensure that contaminated materials are addressed in an appropriate manner. In these situations, it is the Company’s practice to investigate the nature and extent of detected contamination, including potential issues associated with vapor intrusion concerns and/or potential contaminant migration to or from the subject property in groundwater, assess potential liability risks and estimate the costs of required response actions and special handling procedures contaminant migration, assess potential liability risks and estimate the costs of required response actions and special handling procedures. The Company then uses this information as part of its decision-making process with respect to the acquisition, deal structure and/or development of the property. For example, the Company owns a parcel in Massachusetts which was formerly used as a quarry/asphalt batching facility. Pre-purchase testing indicated that the site contained relatively low levels of certain contaminants. The Company has developed an office park on this property. Prior to and during redevelopment activities, the Company engaged a specially licensed environmental consultant to monitor environmental conditions at the site and prepare necessary regulatory submittals based on the results of an environmental risk characterization. A submittal has been made to the regulatory authorities in order to achieve regulatory closure at this site. The submittal included an environmental deed restriction that mandates compliance with certain protective measures in a portion of the site where low levels of residual soil contamination have been left in place in accordance with applicable laws. The Company expects that resolution of the environmental matters relating to the above will not have a material impact on its business, assets, financial condition, results of operations or liquidity. However, the Company cannot assure you that it has identified all environmental liabilities at its properties, that all necessary remediation actions have been or will be undertaken at the Company’s properties or that the Company will be indemnified, in full or at all, in the event that such environmental liabilities arise. 11. Noncontrolling Interests Noncontrolling interests relate to the interests in Boston Properties Limited Partnership not owned by Boston Properties, Inc. and interests in consolidated property partnerships not wholly-owned by the Company. As of December 31, 2017,2020, the noncontrolling interests in Boston Properties Limited Partnership consisted of 16,810,37816,037,121 OP Units, 818,3431,336,115 LTIP Units (including 118,067105,080 2012 OPP Units, 85,40564,468 2013 MYLTIP Units, and 25,10723,100 2014 MYLTIP Units), 366,618Units, 24,966 2015 MYLTIP Units, 473,36089,791 2016 MYLTIP Units and 400,000116,078 2017 MYLTIP Units), 336,195 2018 MYLTIP Units, 219,916 2019 MYLTIP Units and 203,278 2020 MYLTIP Units held by parties other than Boston Properties, Inc. Noncontrolling Interest—Redeemable Preferred Units
On June 25, 2015, Boston Properties Limited Partnership redeemed the remaining 12,667 Series Four Preferred Units for cash totaling approximately $0.6 million, plus accrued and unpaid distributions. The Series Four Preferred Units bore a preferred distribution equal to 2.00% per annum on a liquidation preference
Series Four Preferred Units were presented outside of permanent equity in the Company’s Consolidated Balance Sheets.
The following table reflects the activity of the noncontrolling interests—redeemable preferred units for the year ended December 31, 2015 (in thousands):
| | | | | Balance at December 31, 2014 | $ | 633 |
| Net income | 6 |
| Distributions | (6 | ) | Redemption of redeemable preferred units (Series Four Preferred Units) | (633 | ) | Balance at December 31, 2015 | $ | — |
|
Noncontrolling Interest—Redeemable Interest in Property Partnership
On October 4, 2012, the Company completed the formation of a joint venture, that owns and operates Fountain Square located in Reston, Virginia. The joint venture partner contributed the property valued at approximately $385.0 million and related mortgage indebtedness totaling approximately $211.3 million for a 50% interest in the joint venture. The Company contributed cash totaling approximately $87.0 million for its 50% interest, which cash was distributed to the joint venture partner. Pursuant to the joint venture agreement (i) the Company had rights to acquire the partner’s 50% interest and (ii) the partner had the right to cause the Company to acquire the partner’s interest on January 4, 2016, in each case at a fixed price totaling approximately $102.0 million in cash. The fixed price option rights were to expire on January 31, 2016. The Company was consolidating this joint venture due to the Company’s right to acquire the partner’s 50% interest. The Company recorded the noncontrolling interest at its acquisition-date fair value as temporary equity, due to the redemption option existing outside the control of the Company. The Company was accreting the changes in the redemption value quarterly over the period from the acquisition date to the earliest redemption date using the effective interest method. The Company was recording the accretion after the allocation of net income and distributions of cash flow to the noncontrolling interest account balance.
On August 6, 2015, the parties amended the joint venture agreement to require the Company to acquire its partner’s 50% interest on September 15, 2015 for approximately $100.9 million in cash. On September 15, 2015, the Company acquired its partner’s 50% interest in the consolidated entity that owns Fountain Square for cash of approximately $100.9 million plus working capital and closing prorations and the partner’s share of assumed mortgage indebtedness totaling approximately $105.6 million.
The following table reflects the activity of the noncontrolling interest—redeemable interest in property partnership in the Company’s Fountain Square consolidated entity for the year ended December 31, 2015 (in thousands):
| | | | | Balance at December 31, 2014 | $ | 104,692 |
| Net loss | (7 | ) | Distributions | (2,900 | ) | Adjustment to reflect redeemable interest at redemption value | 5,128 |
| Acquisition of interest | (106,913 | ) | Balance at December 31, 2015 | $ | — |
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Noncontrolling Interest—Common Units During the years ended December 31, 20172020 and 2016, 495,6372019, 856,811 and 190,857144,481 OP Units, respectively, were presented by the holders for redemption (including 36,48688,168 and 103,84792,678 OP Units, respectively, issued upon conversion of LTIP Units, 2012 OPP Units and 2013 MYLTIP Units and 2014- 2017 MYLTIP Units) and were redeemed by Boston Properties, Inc. in exchange for an equal number of shares of Common Stock. Boston Properties Limited Partnership exercised its right under the terms of its partnership agreement to convert an aggregate of 625,043 eligible LTIP Units (including an aggregate of 32,349 2012 OPP Units and 2013 MYLTIP Units) into Common Units effective as of May 2, 2016.These conversions were effected solely for administrative efficiency and had no substantive impact on the rights of Boston Properties Limited Partnership or the holders of these LTIP Units, as the economic and other rights of the LTIP Units converted were substantively
identical to those of the Common Units.In the future, Boston Properties Limited Partnership intends to convert LTIP Units (including 2012 OPP Units and MYLTIP Units) into Common Units promptly after they become eligible for conversion. The May 2016 conversions were, and future conversions will be, effected at the election of Boston Properties Limited Partnership and are without regard to the investment intentions of the holders of the units.
At December 31, 2017,2020, Boston Properties Limited Partnership had outstanding 366,618 2015336,195 2018 MYLTIP Units, 473,360 2016219,916 2019 MYLTIP Units and 400,000 2017203,278 2020 MYLTIP Units (See Note 17).Units. Prior to the applicable measurement date (February 4,5, 2021 for 2018 for 2015 MYLTIP Units (See Note 20)18), February 9,4, 2022 for 2019 for 2016 MYLTIP Units and February 6,3, 2023 for 2020 for 2017 MYLTIP Units), holders of MYLTIP Units will be entitled to receive per unit distributions equal to one-tenth (10%) of the regular quarterly distributions payable on an OP Unit, but will not be entitled to receive any special distributions. After the measurement date, the number of MYLTIP Units, both vested and unvested, that MYLTIP award recipients have earned, if any, based on the establishment of a performance pool, will be entitled to receive distributions in an amount per unit equal to distributions, both regular and special, payable on an OP Unit. On February 6, 2015,4, 2018, the measurement period for the Company’s 2012 OPP Unit awards ended and Boston Properties, Inc.’s TSR performance was sufficient for employees to earn and therefore become eligible to vest in a portion of the 2012 OPP Unit awards. The final outperformance pool was determined to be approximately $32.1 million, or approximately 80% of the total maximum outperformance pool of $40.0 million. As a result, 174,549 2012 OPP Units were automatically forfeited. On February 4, 2016, the measurement period for the Company’s 20132015 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 109.5%22.0% of target, or an aggregate of approximately $13.5 million.$3.6 million (after giving effect to employee separations). As a result, 205,762 2013an aggregate of 337,847 2015 MYLTIP Units that had been previously granted were automatically forfeited.
On February 3, 2017,9, 2019, the measurement period for the Company’s 20142016 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 27.7%69.5% of target, or an aggregate of approximately $3.5$13.6 million(after (after giving effect to voluntary employee separations and the unallocated reserve)separations). As a result, an aggregate of 447,386 2014364,980 2016 MYLTIP Units that had been previously granted were automatically forfeited. On February 6, 2020, the measurement period for the Company’s 2017 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 83.8% of target, or an aggregate of approximately $17.6 million (after giving effect to employee separations). As a result, an aggregate of 270,942 2017 MYLTIP Units that had been previously granted were automatically forfeited. The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, and 2013 - 2016 MYLTIP Units and, after the February 3, 20176, 2020 measurement date, the 20142017 MYLTIP Units) and its distributions on the 20142017 MYLTIP Units (prior to the February 3, 20176, 2020 measurement date), 2015 MYLTIP Units, 2016 MYLTIP Units and 20172018 - 2020 MYLTIP Units (after the February 7, 20174, 2020 issuance date) paid in 2017:that occurred during the year ended December 31, 2020: | | | | | | | | | | | | | | | | | | | | | Record Date | | Payment Date | | Distributions per OP Unit and LTIP Unit | | Distributions per MYLTIP Unit | December 31, 2020 | | January 28, 2021 | | $0.98 | | | $0.098 | | September 30, 2020 | | October 30, 2020 | | $0.98 | | | $0.098 | | June 30, 2020 | | July 31, 2020 | | $0.98 | | | $0.098 | | March 31, 2020 | | April 30, 2020 | | $0.98 | | | $0.098 | | December 31, 2019 | | January 30, 2020 | | $0.98 | | | $0.098 | |
The following table presents Boston Properties Limited Partnership’s distributions on the OP Units and LTIP Units (including the 2012 OPP Units, 2013 - 2015 MYLTIP Units and, after the February 9, 2019 measurement date, the 2016 MYLTIP Units) and its distributions on the 2016 MYLTIP Units (prior to the February 9, 2019 measurement date) and 2017 - 2019 MYLTIP Units (after the February 5, 2019 issuance date) that occurred during the year ended December 31, 2019:
| | | | | | | | | | | | Record Date | | Payment Date | | Distributions per OP Unit and LTIP Unit | | Distributions per MYLTIP Unit | December 29, 2017 | | January 30, 2018 | |
| $0.80 |
| |
| $0.080 |
| September 29, 2017 | | October 31, 2017 | |
| $0.75 |
| |
| $0.075 |
| June 30, 2017 | | July 31, 2017 | |
| $0.75 |
| |
| $0.075 |
| March 31, 2017 | | April 28, 2017 | |
| $0.75 |
| |
| $0.075 |
| December 31, 2016 | | January 30, 2017 | |
| $0.75 |
| |
| $0.075 |
|
| | | | | | | | | | | | | | | | | | | | | Record Date | | Payment Date | | Distributions per OP Unit and LTIP Unit | | Distributions per MYLTIP Unit | December 31, 2019 | | January 30, 2020 | | $0.98 | | | $0.098 | | September 30, 2019 | | October 31, 2019 | | $0.95 | | | $0.095 | | June 28, 2019 | | July 31, 2019 | | $0.95 | | | $0.095 | | March 29, 2019 | | April 30, 2019 | | $0.95 | | | $0.095 | | December 31, 2018 | | January 30, 2019 | | $0.95 | | | $0.095 | |
A holder of an OP Unit may present the OP Unit to Boston Properties Limited Partnership for redemption at any time (subject to restrictions agreed upon at the time of issuance of OP Units to particular holders that may restrict such redemption right for a period of time, generally one1 year from issuance). Upon presentation of an OP Unit for redemption, Boston Properties Limited Partnership must redeem the OP Unit for cash equal to the then value of a share of common stockCommon Stock of Boston Properties, Inc. Boston Properties, Inc. may, in its sole discretion, elect to assume and satisfy the redemption obligation by paying either cash or issuing one1 share of Common Stock. The value of the OP Units (not owned by Boston Properties, Inc. and LTIP Units (including the 2012 OPP Units and 2013 MYLTIP Units and 2014- 2017 MYLTIP Units) assuming that all conditions had been met for the conversion thereof) had all of such units been redeemed at December 31, 20172020 was approximately $2.3$1.6 billion based on the last reported price of a share of Common Stock on the New York Stock Exchange of $130.03$94.53 per share on December 29, 2017.
Boston Properties Limited Partnership
The following table reflects the activity of noncontrolling interests—redeemable common units of Boston Properties Limited Partnership for the years ended December 31, 2017, 2016 and 2015 (in thousands):
| | | | | Balance at December 31, 2014 | $ | 2,310,046 |
| Contributions | 39,030 |
| Net income | 66,951 |
| Distributions | (69,447 | ) | Conversion of redeemable partnership units | (14,343 | ) | Unearned compensation | (4,579 | ) | Other comprehensive loss | (554 | ) | Adjustment to reflect redeemable partnership units at redemption value | (40,415 | ) | Balance at December 31, 2015 | 2,286,689 |
| Contributions | 31,395 |
| Net income | 59,260 |
| Distributions | (49,087 | ) | Conversion of redeemable partnership units | (6,461 | ) | Unearned compensation | (3,464 | ) | Other comprehensive loss | (4,379 | ) | Adjustment to reflect redeemable partnership units at redemption value | (51,913 | ) | Balance at December 31, 2016 | 2,262,040 |
| Contributions | 31,743 |
| Net income | 52,210 |
| Distributions | (54,494 | ) | Conversion of redeemable partnership units | (16,916 | ) | Unearned compensation | 1,650 |
| Cumulative effect of a change in accounting principle | (1,763 | ) | Other comprehensive income | 206 |
| Adjustment to reflect redeemable partnership units at redemption value | 17,587 |
| Balance at December 31, 2017 | $ | 2,292,263 |
|
2020.Noncontrolling Interests—Property Partnerships The noncontrolling interests in property partnerships consist of the outside equity interests in ventures that are consolidated with the financial results of the Company because the Company exercises control over the entities that own the properties. The equity interests in these ventures that are not owned by the Company, totaling approximately $1.7 billion and $1.5 billion at December 31, 20172020 and 2016, respectively,2019, are included in Noncontrolling Interests—Property Partnerships on the accompanying Consolidated Balance Sheets. On September 18, 2015, a consolidated entity in whichApril 1, 2019, the Company has a 50% interest completed the saleacquisition of its 505 9th Street, N.W. property locatedpartner’s 5% ownership interest and promoted profits interest in Washington, DC for approximately $318.0 million, including the assumption by the buyer of approximately $117.0 million of mortgage indebtedness. 505 9th Street, N.W. is an approximately 322,000 net rentable square foot Class A office building. Net cash proceeds totaled approximately $194.6 million, of which the partners’ share was approximately $97.3 million. The Company recognized a gain on sale of real estate totaling approximately $199.5 million and $199.7 million for Boston Properties, Inc. and Boston Properties Limited Partnership, respectively, of which approximately $101.1 million was allocated to the outside partners and is included within Noncontrolling Interests in Property Partnerships in the Company’s Consolidated Statements of Operations. On December 10, 2015, the consolidated entity was dissolved and the Company reclassified the remaining noncontrolling interest balance totaling approximately $4.1 million to Accounts Payable and Accrued Expenses on the Consolidated Balances Sheets, of which approximately $0.2 million was outstanding at December 31, 2016. No amount was outstanding as of December 31, 2017.
On May 12, 2016, the partners in the Company’s consolidated entity that owns Salesforce Tower located in San Francisco, California amendedfor cash totaling approximately $210.9 million, which amount was reduced by approximately $24.1 million to $186.8 million to reflect the venture agreement. Under the original venture agreement, if the Company elects to fund the construction of Salesforce Tower without a construction loan (or a construction loan of less than 50% of project costs) and the venture has commenced vertical constructionrepayment of the project, then the partner’s capital funding obligation shall be limited, in which event the Company shall fund up to 2.5% of the total project costs (i.e., 50% of the partner’s 5% interest in the venture) in the form of a loan to the partner. This loan would bear interest at the then prevailing market interest rates for construction loans. Under the amended agreement, the partners agreed to structure this funding by the Company as preferred equity rather than a loan. The preferred equity contributed by the Company shall earn a preferred return equal to LIBOR plus 3.00% per annum and shall be payable to the Company out of any distributions to which the partner would otherwise be entitled until suchCompany’s preferred equity and preferred return have been repaid toin the Company. Asventure. The Company now owns 100% of December 31, 2017, theSalesforce Tower. The Company has contributedaccounted for the transaction as an aggregate of approximately $16.4 million of preferred equity totransaction for financial reporting purposes and has reflected the venture. Also, underdifference between the joint venture agreement, (a) from and after the stabilization date, the partner has the right to cause the Company to purchase all (but not less than all)fair value of the partner’s interesttotal consideration paid and (b) from and after the third anniversaryrelated carrying value of the stabilization date, the Company has the rightnoncontrolling interest - property partnership totaling approximately $162.5 million as a decrease to acquire all (but not less than all) of the partner’s interest, in each case at an agreed upon purchase price or appraised value. In addition, if certain threshold returns are achieved the partner will be entitled to receive an additional promoted interest. The term stabilization date is definedAdditional Paid-in Capital and Partners’ Capital in the agreement to generally mean the first date after completion upon which Salesforce Tower is (1) at least 90% leased and (2) 50% occupied by tenants that are paying rent. The stabilization date has not yet occurred.
On June 6, 2017, in conjunction with the refinancing of the indebtedness of the Company’s consolidated entity in which it has a 60% interest and that owns 767 Fifth Avenue (the General Motors Building) located in New York City, the members of the consolidated entity amended the limited liability company agreement to provide for the contribution of the remaining unpaid principal balance of the members’ notes payable totaling approximately $273.9 million (of which the Company’s share of approximately $164.4 million is eliminated in consolidation) to equity in the consolidated entity, resulting in an increase of approximately $109.6 million to Noncontrolling Interests in Property Partnerships on the Company’s Consolidated Balance Sheets (See Note 6). There were no changes to the ownership interests or rights of the members as a result of the amendment.Boston Properties, Inc. and Boston Properties Limited Partnership, respectively.
The following table reflects the activity of the noncontrolling interests—property partnerships for the years ended December 31, 2017, 2016 and 2015 (in thousands):
| | | | | Balance at December 31, 2014 | $ | 1,602,467 |
| Capital contributions | 3,758 |
| Dissolution | (4,082 | ) | Net income | 144,734 |
| Accumulated other comprehensive loss | (2,428 | ) | Distributions | (170,049 | ) | Balance at December 31, 2015 | 1,574,400 |
| Capital contributions | 10,756 |
| Net loss | (2,068 | ) | Accumulated other comprehensive loss | (877 | ) | Distributions | (51,564 | ) | Balance at December 31, 2016 | 1,530,647 |
| Capital contributions (1) | 161,585 |
| Net loss | 47,832 |
| Accumulated other comprehensive loss | (2,128 | ) | Distributions | (54,176 | ) | Balance at December 31, 2017 | $ | 1,683,760 |
|
_______________
| | (1) | Includes the contribution of the remaining unpaid principal balance of the members’ notes payable totaling $109,576 to equity in the consolidated entity that owns 767 Fifth Avenue (the General Motors Building). |
12. Stockholders’ Equity / Partners’ Capital Boston Properties, Inc. As of December 31, 2017,2020, Boston Properties, Inc. had 154,325,286155,718,825 shares of Common Stock outstanding. As of December 31, 2020, Boston Properties, Inc. owned 1,730,921 general partnership units and 153,987,904 limited partnership units in Boston Properties Limited Partnership. On June 2, 2017,May 22, 2020, Boston Properties, Inc. renewed its “at the market” (“ATM”) stock offering program through which it may sell from time to time up to an aggregate of $600.0 million of its common stockCommon Stock through sales agents over a three-year3-year period. Under the ATM stock offering program, Boston Properties, Inc. may also engage in forward sale transactions with affiliates of certain sales agents for the sale of its Common Stock on a forward basis. This program replaced the Company’sBoston Properties, Inc.’s prior $600.0 million ATM stock offering program that was scheduled to expire on June 3, 2017. The Company2, 2020. Boston Properties, Inc. intends to use the net proceeds from any offering for general business purposes, which may include investment opportunities and debt reduction. No shares of common stockCommon Stock have been issued under this ATM stock offering program. During the yearyears ended December 31, 2017,2020 and 2019, Boston Properties, Inc. issued 6,68843,792 and 145,088 shares of Common Stock, respectively, upon the exercise of options to purchase Common Stock. During the year ended December 31, 2016, there were no options to purchase Common Stock exercised.
During the years ended December 31, 20172020 and 2016,2019, Boston Properties, Inc. issued 495,637856,811 and 190,857144,481 shares of Common Stock, respectively, in connection with the redemption of an equal number of redeemable OP Units from limited partners. The following table presents Boston Properties, Inc.’s dividends per share and Boston Properties Limited Partnership’s distributions per OP Unit and LTIP Unit paid or payabledeclared in 2017:2020 and during the year ended December 31, 2019: | | | | | | | | | | | | Record Date | | Payment Date | | Dividend (Per Share) |
| | Distribution (Per Unit) |
| December 29, 2017 | | January 30, 2018 | |
| $0.80 |
| |
| $0.80 |
| September 29, 2017 | | October 31, 2017 | | 0.75 |
| | 0.75 |
| June 30, 2017 | | July 31, 2017 | | 0.75 |
| | 0.75 |
| March 31, 2017 | | April 28, 2017 | | 0.75 |
| | 0.75 |
| December 31, 2016 | | January 30, 2017 | | 0.75 |
| | 0.75 |
|
| | | | | | | | | | | | | | | | | | | | | Record Date | | Payment Date | | Dividend (Per Share) | | Distribution (Per Unit) | December 31, 2020 | | January 28, 2021 | | $0.98 | | | $0.98 | | September 30, 2020 | | October 30, 2020 | | $0.98 | | | $0.98 | | June 30, 2020 | | July 31, 2020 | | $0.98 | | | $0.98 | | March 31, 2020 | | April 30, 2020 | | $0.98 | | | $0.98 | | December 31, 2019 | | January 30, 2020 | | $0.98 | | | $0.98 | | | | | | | | | December 31, 2019 | | January 30, 2020 | | $0.98 | | | $0.98 | | September 30, 2019 | | October 31, 2019 | | $0.95 | | | $0.95 | | June 28, 2019 | | July 31, 2019 | | $0.95 | | | $0.95 | | March 29, 2019 | | April 30, 2019 | | $0.95 | | | $0.95 | | December 31, 2018 | | January 30, 2019 | | $0.95 | | | $0.95 | |
Preferred Stock As of December 31, 2017,2020, Boston Properties, Inc. had 80,000 shares (8,000,000 depositary shares each representing 1/100th of a share) outstanding of its 5.25% Series B Cumulative Redeemable Preferred Stock with a liquidation preference of $2,500.00 per share ($25.00 per depositary share). Boston Properties, Inc. pays cumulative cash dividends on the Series B Preferred Stock at a rate of 5.25% per annum of the $2,500.00 liquidation preference per share. Boston Properties, Inc. maydid not have the right to redeem the Series B Preferred Stock prior to March 27, 2018, except in certain circumstances relating to the preservation of Boston Properties, Inc.’s REIT status. On orand after March 27, 2018, Boston Properties, Inc., at its option, may redeem the Series B Preferred Stock for a cash redemption price of $2,500.00 per share ($25.00 per depositary share), plus all accrued and unpaid dividends. The Series B Preferred Stock is not redeemable by the holders, has no maturity date and is not convertible into any other security of Boston Properties, Inc. or its affiliates. The following table presents Boston Properties, Inc.’s dividends per share on its outstanding Series B Preferred Stock paid or payable in 2017: declared during 2020 and during the year ended December 31, 2019: | | | | | | | | | | | | | | | Record Date | | Payment Date | | Dividend (Per Share) |
| February 5, 2021 | | February 16, 2021 | | $32.8125 | | November 4, 2020 | | November 16, 2020 | | $32.8125 | | August 3, 2020 | | August 17, 2020 | | $32.8125 | | May 1, 2020 | | May 15, 2020 | | $32.8125 | | February 4, 2020 | | February 18, 2020 | | $32.8125 | | | | | | | February 4, 2020 | | February 18, 2020 | | $32.8125 | | November 1, 2019 | | November 15, 2019 | | $32.8125 | | August 2, 20182019 | | August 15, 2019 | | $32.8125 | | May 3, 2019 | | May 15, 2019 | | $32.8125 | | February 4, 2019 | | February 15, 20182019 | | $32.8125 | $32.8125 |
| November 3, 2017 | | November 15, 2017 | | 32.8125 |
| August 4, 2017 | | August 15, 2017 | | 32.8125 |
| May 5, 2017 | | May 15, 2017 | | 32.8125 |
| February 3, 2017 | | February 15, 2017 | | 32.8125 |
|
Boston Properties Limited Partnership
The following table presents the changes in the issued and outstanding partners’ capital units since January 1, 2015:
| | | | | | | | | | | | | General Partner Units | | Limited Partner Units | | Total Partners’ Capital Units | Outstanding at December 31, 2014 | | 1,710,644 |
| | 151,403,301 |
| | 153,113,945 |
| Units issued to Boston Properties, Inc. related to Common Stock issued under the Employee Stock Purchase Plan | | 59 |
| | 6,140 |
| | 6,199 |
| Units issued to Boston Properties, Inc. related to Common Stock issued under the Stock Option and Incentive Plan, net | | 340 |
| | 35,246 |
| | 35,586 |
| Units issued to Boston Properties, Inc. related to Common Stock issued in exchange for OP Units | | 4,049 |
| | 420,187 |
| | 424,236 |
| Outstanding at December 31, 2015 | | 1,715,092 |
| | 151,864,874 |
| | 153,579,966 |
| Units issued to Boston Properties, Inc. related to Common Stock issued under the Employee Stock Purchase Plan | | 72 |
| | 5,623 |
| | 5,695 |
| Units issued to Boston Properties, Inc. related to Common Stock issued under the Stock Option and Incentive Plan, net | | 172 |
| | 13,485 |
| | 13,657 |
| Units issued to Boston Properties, Inc. related to Common Stock issued in exchange for OP Units | | 2,407 |
| | 188,450 |
| | 190,857 |
| Outstanding at December 31, 2016 | | 1,717,743 |
| | 152,072,432 |
| | 153,790,175 |
| Units issued to Boston Properties, Inc. related to Common Stock issued under the Employee Stock Purchase Plan | | 21 |
| | 6,296 |
| | 6,317 |
| Units issued to Boston Properties, Inc. related to Common Stock issued under the Stock Option and Incentive Plan, net | | 111 |
| | 33,046 |
| | 33,157 |
| Units issued to Boston Properties, Inc. related to Common Stock issued in exchange for OP Units | | 1,665 |
| | 493,972 |
| | 495,637 |
| Outstanding at December 31, 2017 | | 1,719,540 |
| | 152,605,746 |
| | 154,325,286 |
|
AsThe following table reflects the activity of the Series B Preferred Units for the years ended December 31, 2017, 2016 and 2015 (in thousands), which activity is included within Boston Properties Limited Partnership’s Consolidated Statements of Partners’ Capital:
| | | | | Balance at December 31, 2014 | $ | 193,623 |
| Net income | 10,500 |
| Distributions | (10,500 | ) | Balance at December 31, 2015 | 193,623 |
| Net income | 10,500 |
| Distributions | (10,500 | ) | Balance at December 31, 2016 | 193,623 |
| Net income | 10,500 |
| Distributions | (10,500 | ) | Balance at December 31, 2017 | $ | 193,623 |
|
13. Future Minimum Rents The properties are leased to tenants under net operating leases with initial term expiration dates ranging from 2018 to 2046. The future contractual minimum lease payments to be received (excluding operating expense reimbursements) by the Company as of December 31, 2017, under non-cancelable operating leases which expire on various dates through 2046, are as follows:
| | | | | Years Ending December 31, | (in thousands) | 2018 | $ | 1,962,841 |
| 2019 | 1,998,102 |
| 2020 | 1,920,002 |
| 2021 | 1,783,066 |
| 2022 | 1,596,719 |
| Thereafter | 11,160,780 |
|
No single tenant represented more than 10.0% of the Company’s total rental revenue for the years ended December 31, 2017, 2016 and 2015.
14. Segment Information
The following tables present reconciliations of Net Income Attributable to Boston Properties, Inc. Common Shareholders to the Company’s share of Net Operating Income and Net Income Attributable to Boston Properties Limited Partnership Common Unitholders to the Company’s share of Net Operating Income for the years ended December 31, 2017, 20162020, 2019 and 2015.2018. Boston Properties, Inc. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | | | | 2020 | | 2019 | | 2018 | | | | | | (in thousands) | Net income attributable to Boston Properties, Inc. common shareholders | | | | | | $ | 862,227 | | | $ | 511,034 | | | $ | 572,347 | | Add: | | | | | | | | | | | Preferred dividends | | | | | | 10,500 | | | 10,500 | | | 10,500 | | Noncontrolling interest—common units of the Operating Partnership | | | | | | 97,704 | | | 59,345 | | | 66,807 | | Noncontrolling interests in property partnerships | | | | | | 48,260 | | | 71,120 | | | 62,909 | | Interest expense | | | | | | 431,717 | | | 412,717 | | | 378,168 | | Loss from early extinguishment of debt | | | | | | 0 | | | 29,540 | | | 16,490 | | Impairment loss | | | | | | 0 | | | 24,038 | | | 11,812 | | Net operating income from unconsolidated joint ventures | | | | | | 94,943 | | | 97,716 | | | 79,893 | | Depreciation and amortization expense | | | | | | 683,751 | | | 677,764 | | | 645,649 | | Transaction costs | | | | | | 1,531 | | | 1,984 | | | 1,604 | | Payroll and related costs from management services contracts | | | | | | 11,626 | | | 10,386 | | | 9,590 | | General and administrative expense | | | | | | 133,112 | | | 140,777 | | | 121,722 | | Less: | | | | | | | | | | | Net operating income attributable to noncontrolling interests in property partnerships | | | | | | 162,887 | | | 183,989 | | | 177,365 | | Gains (losses) from investments in securities | | | | | | 5,261 | | | 6,417 | | | (1,865) | | Interest and other income (loss) | | | | | | 5,953 | | | 18,939 | | | 10,823 | | Gains on sales of real estate | | | | | | 618,982 | | | 709 | | | 182,356 | | Income (loss) from unconsolidated joint ventures | | | | | | (85,110) | | | 46,592 | | | 2,222 | | Direct reimbursements of payroll and related costs from management services contracts | | | | | | 11,626 | | | 10,386 | | | 9,590 | | Development and management services revenue | | | | | | 29,641 | | | 40,039 | | | 45,158 | | Company’s share of Net Operating Income | | | | | | $ | 1,626,131 | | | $ | 1,739,850 | | | $ | 1,551,842 | |
| | | | | | | | | | | | | | | | Year ended December 31, | | | 2017 | | 2016 | | 2015 | | | (in thousands) | Net income attributable to Boston Properties, Inc. common shareholders | | $ | 451,939 |
| | $ | 502,285 |
| | $ | 572,606 |
| Add: | | | | | | | Preferred dividends | | 10,500 |
| | 10,500 |
| | 10,500 |
| Noncontrolling interest—common units of the Operating Partnership | | 52,210 |
| | 59,260 |
| | 66,951 |
| Noncontrolling interest—redeemable preferred units of the Operating Partnership | | — |
| | — |
| | 6 |
| Noncontrolling interest in property partnerships | | 47,832 |
| | (2,068 | ) | | 149,855 |
| Losses from interest rate contracts | | — |
| | 140 |
| | — |
| Interest expense | | 374,481 |
| | 412,849 |
| | 432,196 |
| Depreciation and amortization expense | | 617,547 |
| | 694,403 |
| | 639,542 |
| Impairment loss | | — |
| | 1,783 |
| | — |
| Transaction costs | | 668 |
| | 2,387 |
| | 1,259 |
| General and administrative expense | | 113,715 |
| | 105,229 |
| | 96,319 |
| Less: | | | | | | | Gains on sales of real estate | | 7,663 |
| | 80,606 |
| | 375,895 |
| Gains (losses) from early extinguishments of debt | | 496 |
| | (371 | ) | | (22,040 | ) | Gains (losses) from investments in securities | | 3,678 |
| | 2,273 |
| | (653 | ) | Interest and other income | | 5,783 |
| | 7,230 |
| | 6,777 |
| Gain on sale of investment in unconsolidated joint venture | | — |
| | 59,370 |
| | — |
| Income from unconsolidated joint ventures | | 11,232 |
| | 8,074 |
| | 22,770 |
| Development and management services income | | 34,605 |
| | 28,284 |
| | 22,554 |
| Net Operating Income | | $ | 1,605,435 |
| | $ | 1,601,302 |
| | $ | 1,563,931 |
|
Boston Properties Limited Partnership | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | | | | 2020 | | 2019 | | 2018 | | | | | | | (in thousands) | Net income attributable to Boston Properties Limited Partnership common unitholders | | | | | | $ | 979,979 | | | $ | 580,102 | | | $ | 656,903 | | Add: | | | | | | | | | | | Preferred distributions | | | | | | 10,500 | | | 10,500 | | | 10,500 | | Noncontrolling interests in property partnerships | | | | | | 48,260 | | | 71,120 | | | 62,909 | | Interest expense | | | | | | 431,717 | | | 412,717 | | | 378,168 | | Loss from early extinguishment of debt | | | | | | 0 | | | 29,540 | | | 16,490 | | Impairment loss | | | | | | 0 | | | 22,272 | | | 10,181 | | Net operating income from unconsolidated joint ventures | | | | | | 94,943 | | | 97,716 | | | 79,893 | | Depreciation and amortization expense | | | | | | 676,666 | | | 669,956 | | | 637,891 | | Transaction costs | | | | | | 1,531 | | | 1,984 | | | 1,604 | | Payroll and related costs from management services contracts | | | | | | 11,626 | | | 10,386 | | | 9,590 | | General and administrative expense | | | | | | 133,112 | | | 140,777 | | | 121,722 | | Less: | | | | | | | | | | | Net operating income attributable to noncontrolling interests in property partnerships | | | | | | 162,887 | | | 183,989 | | | 177,365 | | Gains (losses) from investments in securities | | | | | | 5,261 | | | 6,417 | | | (1,865) | | Interest and other income (loss) | | | | | | 5,953 | | | 18,939 | | | 10,823 | | Gains on sales of real estate | | | | | | 631,945 | | | 858 | | | 190,716 | | Income (loss) from unconsolidated joint ventures | | | | | | (85,110) | | | 46,592 | | | 2,222 | | Direct reimbursements of payroll and related costs from management services contracts | | | | | | 11,626 | | | 10,386 | | | 9,590 | | Development and management services revenue | | | | | | 29,641 | | | 40,039 | | | 45,158 | | Company’s share of Net Operating Income | | | | | | $ | 1,626,131 | | | $ | 1,739,850 | | | $ | 1,551,842 | |
| | | | | | | | | | | | | | | Year ended December 31, | | | 2017 | | 2016 | | 2015 | | | (in thousands) | Net income attributable to Boston Properties Limited Partnership common unitholders | | $ | 512,866 |
| | $ | 575,341 |
| | $ | 648,748 |
| Add: | | | | | | | Preferred distributions | | 10,500 |
| | 10,500 |
| | 10,500 |
| Noncontrolling interest—redeemable preferred units | | — |
| | — |
| | 6 |
| Noncontrolling interest in property partnerships | | 47,832 |
| | (2,068 | ) | | 149,855 |
| Losses from interest rate contracts
| | — |
| | 140 |
| | — |
| Interest expense | | 374,481 |
| | 412,849 |
| | 432,196 |
| Depreciation and amortization expense | | 609,407 |
| | 682,776 |
| | 631,549 |
| Impairment loss | | — |
| | 1,783 |
| | — |
| Transaction costs | | 668 |
| | 2,387 |
| | 1,259 |
| General and administrative expense | | 113,715 |
| | 105,229 |
| | 96,319 |
| Less: | | | | | | | Gains on sales of real estate | | 8,240 |
| | 82,775 |
| | 377,093 |
| Gains (losses) from early extinguishments of debt | | 496 |
| | (371 | ) | | (22,040 | ) | Gains (losses) from investments in securities | | 3,678 |
| | 2,273 |
| | (653 | ) | Interest and other income | | 5,783 |
| | 7,230 |
| | 6,777 |
| Gain on sale of investment in unconsolidated joint venture
| | — |
| | 59,370 |
| | — |
| Income from unconsolidated joint ventures | | 11,232 |
| | 8,074 |
| | 22,770 |
| Development and management services income | | 34,605 |
| | 28,284 |
| | 22,554 |
| Net Operating Income | | $ | 1,605,435 |
| | $ | 1,601,302 |
| | $ | 1,563,931 |
|
Net operating income (“NOI”) is a non-GAAP financial measure equal to net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders, as applicable, the most directly comparable GAAP financial measures, plus (1) preferred dividends/distributions, net income attributable to noncontrolling interests, lossesinterest expense, loss from interest rate contracts, interest expense,early extinguishment of debt, impairment loss, depreciation and amortization impairment loss,expense, transaction costs, payroll and related costs from management services contracts and corporate general and administrative expense less (2) gains on sales of real estate, gains (losses) from early extinguishments of debt, gains (losses) from investments in securities, interest and other income gain(loss), gains on salesales of investment in unconsolidated joint venture,real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services revenue. The Company believes NOI is useful to investors as a performance measure and believes it provides useful information to investors regarding its results of operations and financial condition because, when compared across periods, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unleveraged basis, providing perspective not immediately apparent from net income attributable to Boston Properties, Inc. common shareholders and net income attributable to Boston Properties Limited Partnership common unitholders. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. Similarly, interest expense may be incurred at the property level even though the financing proceeds may be used at the corporate level (e.g., used for other investment activity). In addition, depreciation and amortization expense, because of historical cost accounting and useful life estimates, may distort operating performance measures at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs or real estate companies that define NOI differently.
The Company’s internal reporting utilizes its share of NOI, which includes its share of NOI from consolidated and unconsolidated joint ventures, which is a non-GAAP financial measure that is calculated as the consolidated amount, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based upon the Company’s economic percentage ownership interest and, in some cases, after priority allocations), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based upon the partners’ economic percentage ownership interests and, in some cases, after priority allocations, income allocation to private REIT shareholders and their share of fees due to the Company). The Company’s share of NOI from unconsolidated joint ventures does not include impairment losses on its investments in unconsolidated joint ventures or its share of gains on sales of real estate from unconsolidated joint ventures, both of which are included within Income From Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations. Management utilizes its share of NOI in assessing its performance as the Company has several significant joint ventures and, in some cases, the Company exercises significant influence over, but does not control, the joint venture, in which case GAAP requires that the Company account for the joint venture entity using the equity method of accounting and the Company does not consolidate it for financial reporting purposes. In other cases, GAAP requires that the Company consolidate the venture even though the Company’s partner(s) owns a significant percentage interest. As a result, the presentations of the Company’s share of NOI should not be considered a substitute for, and should only be considered together with and as a supplement to, the Company’s financial information presented in accordance with GAAP. Asset information by segment is not reported because the Company does not use this measure to assess performance. Therefore, depreciation and amortization expense is not allocated among segments. Preferred dividends/distributions, noncontrolling interests, lossesinterest expense, loss from interest rate contracts, interest expense,early extinguishment of debt, impairment loss, depreciation and amortization expense, impairment loss, transactionstransaction costs, payroll and related costs from management services contracts, corporate general and administrative expense, gains on sales
of real estate, gains (losses) from early extinguishments of debt, gains (losses) from investments in securities, interest and other income gain(loss), gains on salesales of investment in unconsolidated joint venture,real estate, income (loss) from unconsolidated joint ventures, direct reimbursements of payroll and related costs from management services contracts and development and management services incomerevenue are not included in NOI and are provided as internal reporting addresses thesereconciling items on a corporate level.to the Company’s reconciliations of its share of NOI to net income attributable to common shareholders/unitholders.
The Company’s segments are based on the Company’s method of internal reporting which classifies its operations by both geographic area and property type.area. The Company’s segments by geographic area are Boston, Los Angeles, New York, San Francisco and Washington, DC. SegmentsThe Company also presents information for each segment by property type, include:including Office, Residential and Hotel. Beginning on January 1, 2016,Included within the propertiesOffice property type are commercial office and retail leases, as well as parking revenue. Upon the adoption of ASC 842, any write-off for bad debt, including accrued rent, will be recorded as a reduction to lease revenue. As a result of COVID-19, during the year ended December 31, 2020, the Company wrote off approximately $67.7 million related to accrued rent balances and approximately $22.6 million related to accounts receivable balances. The write-offs were for tenants, primarily in the retail, entertainment and co-working sectors, that either terminated their leases or that the Company considered their accrued rent and/or accounts receivable balances no longer probable of collection.
In addition, parking and other revenue for the year ended December 31, 2020 decreased by approximately $32.9 million compared to 2019. These decreases were historically includedprimarily in transient and monthly parking revenue. The degree to which the Company’s commercial and retail tenants’ and parking operators’ businesses are, or will continue to be, negatively impacted by COVID-19, including by measures intended to reduce its spread, such as mandatory business closures and “stay-at-home” orders, could result in a reduction in the Company’s Office/Technical segmentcash flows or require that the Company write off additional accrued rent and/or accounts receivable balances, and this could have a material adverse effect on lease revenue and thus the results of the Company’s Office property type. The Boston Marriott Cambridge closed in March 2020 due to COVID-19. The hotel re-opened on October 2, 2020 and has been operating at a diminished occupancy due to the continued impacts that COVID-19 has had on business and leisure travel. The closing of the hotel for more than two fiscal quarters, weak demand and low occupancy since its re-opening, have had, and are now included inexpected to continue to have, a material adverse effect on the Office segment to align with its methodhotel’s operations and thus the results of internal reporting, which shifted after the dispositionCompany’s Hotel property type.
Information by geographic area and property type (dollars in thousands): For the year ended December 31, 2017:2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston | | Los Angeles | | New York | | San Francisco | | Washington, DC | | Total | Rental Revenue: (1) | | | | | | | | | | | | Office | $ | 897,915 | | | $ | 0 | | | $ | 935,966 | | | $ | 508,327 | | | $ | 336,587 | | | $ | 2,678,795 | | Residential | 13,616 | | | 0 | | | 0 | | | 155 | | | 24,375 | | | 38,146 | | Hotel | 7,478 | | | 0 | | | 0 | | | 0 | | | 0 | | | 7,478 | | Total | 919,009 | | | 0 | | | 935,966 | | | 508,482 | | | 360,962 | | | 2,724,419 | | % of Grand Totals | 33.73 | % | | 0 | % | | 34.36 | % | | 18.66 | % | | 13.25 | % | | 100.00 | % | Rental Expenses: | | | | | | | | | | | | Office | 318,509 | | | 0 | | | 384,753 | | | 163,156 | | | 132,051 | | | 998,469 | | Residential | 5,378 | | | 0 | | | 0 | | | 2,261 | | | 11,100 | | | 18,739 | | Hotel | 13,136 | | | 0 | | | 0 | | | 0 | | | 0 | | | 13,136 | | Total | 337,023 | | | 0 | | | 384,753 | | | 165,417 | | | 143,151 | | | 1,030,344 | | % of Grand Totals | 32.71 | % | | 0 | % | | 37.35 | % | | 16.05 | % | | 13.89 | % | | 100.00 | % | Net operating income | $ | 581,986 | | | $ | 0 | | | $ | 551,213 | | | $ | 343,065 | | | $ | 217,811 | | | $ | 1,694,075 | | % of Grand Totals | 34.35 | % | | 0 | % | | 32.54 | % | | 20.25 | % | | 12.86 | % | | 100.00 | % | Less: Net operating income attributable to noncontrolling interests in property partnerships | (41,849) | | | 0 | | | (121,038) | | | 0 | | | 0 | | | (162,887) | | Add: Company’s share of net operating income from unconsolidated joint ventures | 10,765 | | | 57,907 | | | (5,326) | | | 14,928 | | | 16,669 | | | 94,943 | | Company’s share of net operating income | $ | 550,902 | | | $ | 57,907 | | | $ | 424,849 | | | $ | 357,993 | | | $ | 234,480 | | | $ | 1,626,131 | | % of Grand Totals | 33.88 | % | | 3.56 | % | | 26.12 | % | | 22.02 | % | | 14.42 | % | | 100.00 | % |
_______________ (1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.
| | | | | | | | | | | | | | | | | | | | | | Boston | | New York | | San Francisco | | Washington, DC | | Total | Rental Revenue: | | | | | | | | | | Office | $ | 776,279 |
| | $ | 969,371 |
| | $ | 345,519 |
| | $ | 414,103 |
| | $ | 2,505,272 |
| Residential | 4,745 |
| | — |
| | — |
| | 11,851 |
| | 16,596 |
| Hotel | 45,603 |
| | — |
| | — |
| | — |
| | 45,603 |
| Total | 826,627 |
| | 969,371 |
| | 345,519 |
| | 425,954 |
| | 2,567,471 |
| % of Grand Totals | 32.20 | % | | 37.75 | % | | 13.46 | % | | 16.59 | % | | 100.00 | % | Rental Expenses: | | | | | | | | | | Office | 301,097 |
| | 372,810 |
| | 105,253 |
| | 144,515 |
| | 923,675 |
| Residential | 2,044 |
| | — |
| | — |
| | 4,258 |
| | 6,302 |
| Hotel | 32,059 |
| | — |
| | — |
| | — |
| | 32,059 |
| Total | 335,200 |
| | 372,810 |
| | 105,253 |
| | 148,773 |
| | 962,036 |
| % of Grand Totals | 34.84 | % | | 38.76 | % | | 10.94 | % | | 15.46 | % | | 100.00 | % | Net operating income | $ | 491,427 |
| | $ | 596,561 |
| | $ | 240,266 |
| | $ | 277,181 |
| | $ | 1,605,435 |
| % of Grand Totals | 30.61 | % | | 37.15 | % | | 14.97 | % | | 17.27 | % | | 100.00 | % |
For the year ended December 31, 2016:2019: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston | | Los Angeles | | New York | | San Francisco | | Washington, DC | | Total | Rental Revenue: (1) | | | | | | | | | | | | Office | $ | 895,098 | | | $ | 0 | | | $ | 1,011,912 | | | $ | 533,189 | | | $ | 384,435 | | | $ | 2,824,634 | | Residential | 13,786 | | | 0 | | | 0 | | | 0 | | | 23,128 | | | 36,914 | | Hotel | 48,589 | | | 0 | | | 0 | | | 0 | | | 0 | | | 48,589 | | Total | 957,473 | | | 0 | | | 1,011,912 | | | 533,189 | | | 407,563 | | | 2,910,137 | | % of Grand Totals | 32.90 | % | | 0 | % | | 34.78 | % | | 18.32 | % | | 14.00 | % | | 100.00 | % | Rental Expenses: | | | | | | | | | | | | Office | 322,282 | | | 0 | | | 389,532 | | | 177,994 | | | 144,217 | | | 1,034,025 | | Residential | 5,071 | | | 0 | | | 0 | | | 0 | | | 10,914 | | | 15,985 | | Hotel | 34,004 | | | 0 | | | 0 | | | 0 | | | 0 | | | 34,004 | | Total | 361,357 | | | 0 | | | 389,532 | | | 177,994 | | | 155,131 | | | 1,084,014 | | % of Grand Totals | 33.34 | % | | 0 | % | | 35.93 | % | | 16.42 | % | | 14.31 | % | | 100.00 | % | Net operating income | $ | 596,116 | | | $ | 0 | | | $ | 622,380 | | | $ | 355,195 | | | $ | 252,432 | | | $ | 1,826,123 | | % of Grand Totals | 32.64 | % | | 0 | % | | 34.09 | % | | 19.45 | % | | 13.82 | % | | 100.00 | % | Less: Net operating income attributable to noncontrolling interests in property partnerships | (40,109) | | | 0 | | | (143,432) | | | (448) | | | 0 | | | (183,989) | | Add: Company’s share of net operating income from unconsolidated joint ventures | 5,494 | | | 61,338 | | | 4,174 | | | 0 | | | 26,710 | | | 97,716 | | Company’s share of net operating income | $ | 561,501 | | | $ | 61,338 | | | $ | 483,122 | | | $ | 354,747 | | | $ | 279,142 | | | $ | 1,739,850 | | % of Grand Totals | 32.27 | % | | 3.53 | % | | 27.77 | % | | 20.39 | % | | 16.04 | % | | 100.00 | % |
_______________ (1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations.
| | | | | | | | | | | | | | | | | | | | | | Boston | | New York | | San Francisco | | Washington, DC | | Total | Rental Revenue: | | | | | | | | | | Office | $ | 727,265 |
| | $ | 1,012,518 |
| | $ | 318,609 |
| | $ | 402,561 |
| | $ | 2,460,953 |
| Residential | 4,812 |
| | — |
| | — |
| | 11,887 |
| | 16,699 |
| Hotel | 44,884 |
| | — |
| | — |
| | — |
| | 44,884 |
| Total | 776,961 |
| | 1,012,518 |
| | 318,609 |
| | 414,448 |
| | 2,522,536 |
| % of Grand Totals | 30.80 | % | | 40.14 | % | | 12.63 | % | | 16.43 | % | | 100.00 | % | Rental Expenses: | | | | | | | | | | Office | 282,827 |
| | 363,188 |
| | 100,787 |
| | 135,890 |
| | 882,692 |
| Residential | 2,708 |
| | — |
| | — |
| | 4,368 |
| | 7,076 |
| Hotel | 31,466 |
| | — |
| | — |
| | — |
| | 31,466 |
| Total | 317,001 |
| | 363,188 |
| | 100,787 |
| | 140,258 |
| | 921,234 |
| % of Grand Totals | 34.41 | % | | 39.42 | % | | 10.94 | % | | 15.23 | % | | 100.00 | % | Net operating income | $ | 459,960 |
| | $ | 649,330 |
| | $ | 217,822 |
| | $ | 274,190 |
| | $ | 1,601,302 |
| % of Grand Totals | 28.73 | % | | 40.55 | % | | 13.60 | % | | 17.12 | % | | 100.00 | % |
For the year ended December 31, 2015:2018: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston | | Los Angeles | | New York | | San Francisco | | Washington, DC | | Total | Rental Revenue: (1) | | | | | | | | | | | | Office | $ | 838,341 | | | $ | 0 | | | $ | 959,050 | | | $ | 397,180 | | | $ | 396,088 | | | $ | 2,590,659 | | Residential | 6,694 | | | 0 | | | 0 | | | 0 | | | 15,857 | | | 22,551 | | Hotel | 49,118 | | | 0 | | | 0 | | | 0 | | | 0 | | | 49,118 | | Total | 894,153 | | | 0 | | | 959,050 | | | 397,180 | | | 411,945 | | | 2,662,328 | | % of Grand Totals | 33.59 | % | | 0 | % | | 36.02 | % | | 14.92 | % | | 15.47 | % | | 100.00 | % | Rental Expenses: | | | | | | | | | | | | Office | 315,653 | | | 0 | | | 377,992 | | | 130,016 | | | 142,886 | | | 966,547 | | Residential | 3,632 | | | 0 | | | 0 | | | 0 | | | 8,972 | | | 12,604 | | Hotel | 33,863 | | | 0 | | | 0 | | | 0 | | | 0 | | | 33,863 | | Total | 353,148 | | | 0 | | | 377,992 | | | 130,016 | | | 151,858 | | | 1,013,014 | | % of Grand Totals | 34.86 | % | | 0 | % | | 37.32 | % | | 12.83 | % | | 14.99 | % | | 100.00 | % | Net operating income | $ | 541,005 | | | $ | 0 | | | $ | 581,058 | | | $ | 267,164 | | | $ | 260,087 | | | $ | 1,649,314 | | % of Grand Totals | 32.80 | % | | 0 | % | | 35.23 | % | | 16.20 | % | | 15.77 | % | | 100.00 | % | Less: Net operating income attributable to noncontrolling interests in property partnerships | (33,862) | | | 0 | | | (143,562) | | | 59 | | | 0 | | | (177,365) | | Add: Company’s share of net operating income from unconsolidated joint ventures | 2,866 | | | 42,750 | | | 6,590 | | | 0 | | | 27,687 | | | 79,893 | | Company’s share of net operating income | $ | 510,009 | | | $ | 42,750 | | | $ | 444,086 | | | $ | 267,223 | | | $ | 287,774 | | | $ | 1,551,842 | | % of Grand Totals | 32.86 | % | | 2.75 | % | | 28.63 | % | | 17.22 | % | | 18.54 | % | | 100.00 | % |
_______________ (1)Rental Revenue is equal to Total Revenue per the Company’s Consolidated Statements of Operations, less Development and Management Services Revenue and Direct Reimbursements of Payroll and Related Costs from Management Services Contracts Revenue per the Consolidated Statements of Operations. | | | | | | | | | | | | | | | | | | | | | | Boston | | New York | | San Francisco | | Washington, DC | | Total | Rental Revenue: | | | | | | | | | | Office | $ | 716,246 |
| | $ | 1,000,030 |
| | $ | 302,434 |
| | $ | 384,628 |
| | $ | 2,403,338 |
| Residential | 4,801 |
| | — |
| | — |
| | 14,082 |
| | 18,883 |
| Hotel | 46,046 |
| | — |
| | — |
| | — |
| | 46,046 |
| Total | 767,093 |
| | 1,000,030 |
| | 302,434 |
| | 398,710 |
| | 2,468,267 |
| % of Grand Totals | 31.08 | % | | 40.52 | % | | 12.25 | % | | 16.15 | % | | 100.00 | % | Rental Expenses: | | | | | | | | | | Office | 287,341 |
| | 346,897 |
| | 98,206 |
| | 131,581 |
| | 864,025 |
| Residential | 2,006 |
| | — |
| | — |
| | 6,221 |
| | 8,227 |
| Hotel | 32,084 |
| | — |
| | — |
| | — |
| | 32,084 |
| Total | 321,431 |
| | 346,897 |
| | 98,206 |
| | 137,802 |
| | 904,336 |
| % of Grand Totals | 35.54 | % | | 38.36 | % | | 10.86 | % | | 15.24 | % | | 100.00 | % | Net operating income | $ | 445,662 |
| | $ | 653,133 |
| | $ | 204,228 |
| | $ | 260,908 |
| | $ | 1,563,931 |
| % of Grand Totals | 28.50 | % | | 41.76 | % | | 13.06 | % | | 16.68 | % | | 100.00 | % |
15.14. Earnings Per Share / Common Unit
Boston Properties, Inc. The following table provides a reconciliation of both the net income attributable to Boston Properties, Inc. common shareholders and the number of common shares used in the computation of basic earnings per share (“EPS”), which is calculated by dividing net income attributable to Boston Properties, Inc. common shareholders by the weighted-average number of common shares outstanding during the period. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities. As such, unvested restricted common stock of Boston Properties, Inc. and Boston Properties Limited Partnership’s LTIP Units, 2012 OPP Units and MYLTIP Units are considered participating securities. Participating securities are included in the computation of basic EPS of Boston Properties, Inc. using the two-class method. Participating securities are included in the computation of diluted EPS of Boston Properties, Inc. using the if-converted method if the impact is dilutive. Because the 2012 OPP Units and 2013 MYLTIP Units and 2014- 2017 MYLTIP Units required, and the 2015-20172018 - 2020 MYLTIP Units require, Boston Properties, Inc. to outperform absolute andand/or relative return thresholds, unless such thresholds have been met by the end of the applicable reporting period, Boston Properties, Inc. excludes such units from the diluted EPS calculation. Other potentially dilutive common shares, including stock options, restricted stock and other securities of Boston Properties Limited Partnership that are exchangeable for Boston Properties, Inc.’s Common Stock, and the related impact on earnings, are considered when calculating diluted EPS.
| | | For the Year Ended December 31, 2017 | | Year ended December 31, 2020 | | Income (Numerator) | | Shares (Denominator) | | Per Share Amount | | Income (Numerator) | | Shares (Denominator) | | Per Share Amount | | (in thousands, except for per share amounts) | | (in thousands, except for per share amounts) | Basic Earnings: | | | | | | Basic Earnings: | | Net income attributable to Boston Properties, Inc. common shareholders | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 862,227 | | | 155,432 | | | $ | 5.55 | | Allocation of undistributed earnings to participating securities | | Allocation of undistributed earnings to participating securities | (748) | | | 0 | | | (0.01) | | Net income attributable to Boston Properties, Inc. common shareholders | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 861,479 | | | 155,432 | | | $ | 5.54 | | Effect of Dilutive Securities: | | Effect of Dilutive Securities: | | Stock Based Compensation | | Stock Based Compensation | 0 | | | 85 | | | 0 | | Diluted Earnings: | | Diluted Earnings: | | | | | | Net income attributable to Boston Properties, Inc. common shareholders | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 861,479 | | | 155,517 | | | $ | 5.54 | | | | | | Year ended December 31, 2019 | | | | Income (Numerator) | | Shares (Denominator) | | Per Share Amount | | | | (in thousands, except for per share amounts) | Basic Earnings: | | Basic Earnings: | | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 451,939 |
| | 154,190 |
| | $ | 2.93 |
| Net income attributable to Boston Properties, Inc. common shareholders | $ | 511,034 | | | 154,582 | | | $ | 3.31 | | Effect of Dilutive Securities: | | | | | | Effect of Dilutive Securities: | | Stock Based Compensation | — |
| | 200 |
| | — |
| Stock Based Compensation | 0 | | | 301 | | | (0.01) | | Diluted Earnings: | | | | | | Diluted Earnings: | | | | | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 451,939 |
| | 154,390 |
| | $ | 2.93 |
| Net income attributable to Boston Properties, Inc. common shareholders | $ | 511,034 | | | 154,883 | | | $ | 3.30 | | | | | | | | | | | | | | | For the Year Ended December 31, 2016 | | Year ended December 31, 2018 | | Income (Numerator) | | Shares (Denominator) | | Per Share Amount | | Income (Numerator) | | Shares (Denominator) | | Per Share Amount | | (in thousands, except for per share amounts) | | (in thousands, except for per share amounts) | Basic Earnings: | | | | | | Basic Earnings: | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 502,285 |
| | 153,715 |
| | $ | 3.27 |
| Net income attributable to Boston Properties, Inc. common shareholders | $ | 572,347 | | | 154,427 | | | $ | 3.71 | | Allocation of undistributed earnings to participating securities | (283 | ) | | — |
| | — |
| Allocation of undistributed earnings to participating securities | (101) | | | 0 | | | 0 | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 502,002 |
| | 153,715 |
| | $ | 3.27 |
| Net income attributable to Boston Properties, Inc. common shareholders | $ | 572,246 | | | 154,427 | | | $ | 3.71 | | Effect of Dilutive Securities: | | | | | | Effect of Dilutive Securities: | | Stock Based Compensation | — |
| | 262 |
| | (0.01 | ) | Stock Based Compensation | 0 | | | 255 | | | (0.01) | | Diluted Earnings: | | | | | | Diluted Earnings: | | | | | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 502,002 |
| | 153,977 |
| | $ | 3.26 |
| Net income attributable to Boston Properties, Inc. common shareholders | $ | 572,246 | | | 154,682 | | | $ | 3.70 | | | | | | | | | | | | | | | For the Year Ended December 31, 2015 | | | Income (Numerator) | | Shares (Denominator) | | Per Share Amount | | | (in thousands, except for per share amounts) | | Basic Earnings: | | | | | | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 572,606 |
| | 153,471 |
| | $ | 3.73 |
| | Effect of Dilutive Securities: | | | | | | | Stock Based Compensation | — |
| | 373 |
| | (0.01 | ) | | Diluted Earnings: | | | | | | | Net income attributable to Boston Properties, Inc. common shareholders | $ | 572,606 |
| | 153,844 |
| | $ | 3.72 |
| | | | | | | | |
Boston Properties Limited Partnership The following table provides a reconciliation of both the net income attributable to Boston Properties Limited Partnership common unitholders and the number of common units used in the computation of basic earnings per common unit, which is calculated by dividing net income attributable to Boston Properties Limited Partnership common unitholders by the weighted-average number of common units outstanding during the period. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are also participating securities. As such, unvested restricted common stock of Boston Properties, Inc. and Boston Properties Limited Partnership’s LTIP Units, 2012 OPP Units and MYLTIP Units are considered participating securities. Participating securities are included in the computation of basic earnings per common unit using the
two-class method. Participating securities are included in the computation of diluted earnings per common unit using the if-converted method if the impact is dilutive. Because the 2012 OPP Units and 2013 MYLTIP Units and 2014- 2017 MYLTIP Units required, and the 2015-20172018 - 2020 MYLTIP Units require, Boston Properties, Inc. to outperform absolute andand/or relative return thresholds, unless such thresholds have been met by the end of the applicable reporting period, Boston Properties Limited Partnership excludes such units from the diluted earnings per common unit calculation. Other potentially dilutive common units and the related impact on earnings are considered when calculating diluted earnings per common unit. Included in the number of units (the denominator) below are approximately 17,471,000, 17,646,00017,211,000 and 17,668,00017,618,000 and 17,485,000 redeemable common units for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. | | | | | | | | | | | | | For the Year Ended December 31, 2017 | | Income (Numerator) | | Units (Denominator) | | Per Unit Amount | | (in thousands, except for per unit amounts) | Basic Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 512,866 |
| | 171,661 |
| | $ | 2.99 |
| Effect of Dilutive Securities: | | | | | | Stock Based Compensation | — |
| | 200 |
| | (0.01 | ) | Diluted Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 512,866 |
| | 171,861 |
| | $ | 2.98 |
|
| | | | | | | | | | | | | For the Year Ended December 31, 2016 | | Income (Numerator) | | Units (Denominator) | | Per Unit Amount | | (in thousands, except for per unit amounts) | Basic Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 575,341 |
| | 171,361 |
| | $ | 3.36 |
| Allocation of undistributed earnings to participating securities | (316 | ) | | — |
| | — |
| Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 575,025 |
| | 171,361 |
| | $ | 3.36 |
| Effect of Dilutive Securities: | | | | | | Stock Based Compensation | — |
| | 262 |
| | (0.01 | ) | Diluted Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 575,025 |
| | 171,623 |
| | $ | 3.35 |
| | | | | | | | For the Year Ended December 31, 2015 | | Income (Numerator) | | Units (Denominator) | | Per Unit Amount | | (in thousands, except for per unit amounts) | Basic Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 648,748 |
| | 171,139 |
| | $ | 3.79 |
| Effect of Dilutive Securities: | | | | | | Stock Based Compensation | — |
| | 373 |
| | (0.01 | ) | Diluted Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 648,748 |
| | 171,512 |
| | $ | 3.78 |
| | | | | | |
| | | | | | | | | | | | | | | | | | | Year ended December 31, 2020 | | Income (Numerator) | | Units (Denominator) | | Per Unit Amount | | (in thousands, except for per unit amounts) | Basic Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 979,979 | | | 172,643 | | | $ | 5.68 | | Allocation of undistributed earnings to participating securities | (830) | | | 0 | | | (0.01) | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 979,149 | | | 172,643 | | | $ | 5.67 | | Effect of Dilutive Securities: | | | | | | Stock Based Compensation | 0 | | | 85 | | | 0 | | Diluted Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 979,149 | | | 172,728 | | | $ | 5.67 | | | | | | | | | Year ended December 31, 2019 | | Income (Numerator) | | Units (Denominator) | | Per Unit Amount | | (in thousands, except for per unit amounts) | Basic Earnings: | | | | | | | | | | | | | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 580,102 | | | 172,200 | | | $ | 3.37 | | Effect of Dilutive Securities: | | | | | | Stock Based Compensation | 0 | | | 301 | | | (0.01) | | Diluted Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 580,102 | | | 172,501 | | | $ | 3.36 | | | | | | | |
| | | | | | | | | | | | | | | | | | | Year ended December 31, 2018 | | Income (Numerator) | | Units (Denominator) | | Per Unit Amount | | (in thousands, except for per unit amounts) | Basic Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 656,903 | | | 171,912 | | | $ | 3.82 | | Allocation of undistributed earnings to participating securities | (113) | | | 0 | | | 0 | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 656,790 | | | 171,912 | | | $ | 3.82 | | Effect of Dilutive Securities: | | | | | | Stock Based Compensation | 0 | | | 255 | | | (0.01) | | Diluted Earnings: | | | | | | Net income attributable to Boston Properties Limited Partnership common unitholders | $ | 656,790 | | | 172,167 | | | $ | 3.81 | | | | | | | |
16.
15. Employee Benefit Plans Effective January 1, 1985, the predecessor of the Company adopted a 401(k) Savings Plan (the “Plan”) for its employees. Under the Plan, as amended, employees, as defined, are eligible to participate in the Plan after they have completed three months of service. Upon formation, the Company adopted the Plan and the terms of the Plan. Under the Plan, as amended, the Company’s matching contribution equals 200% of the first 3% of participant’s eligible earnings contributed (utilizing earnings that are not in excess of an amount established by the IRS ($270,000, $265,000285,000, $280,000 and $265,000 $275,000in 2017, 20162020, 2019 and 2015,2018, respectively), indexed for inflation) with no vesting requirement. The Company’s aggregate matching contribution for the years ended December 31, 2017, 20162020, 2019 and 20152018 was approximately $4.0 million, $4.2 million and $4.1 million, $4.0 million and $3.7 million, respectively. The Plan also provides for supplemental retirement contributions to certain employees who had at least ten years of service on January 1, 2001, and who were 40 years of age or older as of January 1, 2001. The maximum supplemental retirement contribution will not exceed the annual limit on contributions established by the IRS. The Company will record an annual supplemental retirement credit for the benefit of each participant. The Company’s supplemental retirement contribution and credit for the years ended December 31, 2017, 2016 and 2015 was $18,000, $21,000 and $42,000, respectively.
The Company also maintains a deferred compensation plan that is designed to allow officers of Boston Properties, Inc. to defer a portion of theirthe officer’s current income on a pre-tax basis and receive a tax-deferred return on these deferrals.deferrals based on the performance of specific investments selected by the officer. The Company’s obligation under the plan is that of an unsecured promise to pay the deferred compensation to the plan participants in the future. At December 31, 20172020 and 2016,2019, the Company had maintained approximately $29.2$38.6 million and $23.8$36.0 million, respectively, in a separate account, which is not restricted as to its use. The Company’s liability under the plan is equal to the total amount of compensation deferred by the plan participants and earnings on the deferred compensation pursuant to investments elected by the plan participants. The Company’s liability as of December 31, 20172020 and 20162019 was $29.2approximately $38.6 million and $23.8$36.0 million, respectively, which are included in the accompanying Consolidated Balance Sheets. 17.16. Stock Option and Incentive Plan
At Boston Properties, Inc.’s 2012 annual meeting of stockholders held on May 15, 2012, its stockholders approved the Boston Properties, Inc. 2012 Stock Option and Incentive Plan (the “2012 Plan”). The 2012 Plan replaced the 1997 Stock Option and Incentive Plan (the “1997 Plan”). The material terms of the 2012 Plan include, among other things: (1) the maximum number of shares of common stock reserved and available for issuance under the 2012 Plan is the sum of (i) 13,000,000 newly authorized shares, plus (ii) the number of shares available for grant under the 1997 Stock Plan immediately prior to the effective date of the 2012 Plan, plus (iii) any shares underlying grants under the 1997 Plan that are forfeited, canceled or terminated (other than by exercise) in the future; (2) “full-value” awards (i.e., awards other than stock options) are multiplied by a 2.32 conversion ratio to calculate the number of shares available under the 2012 Plan that are used for each full-value award, as opposed to a 1.0 conversion ratio for each stock option awarded under the 2012 Plan; (3) shares tendered or held back for taxes will not be added back to the reserved pool under the 2012 Plan; (4) stock options may not be re-priced without stockholder approval; and (5) the term of the 2012 Plan is for ten10 years from the date of stockholder approval.
On January 25, 2017,February 4, 2020, Boston Properties, Inc.’s Compensation Committee approvedgranted the 20172020 MYLTIP awards under itsthe Boston Properties, Inc.’s 2012 Stock Option and Incentive Plan (the “2012 Plan”) to certain officers and employees of Boston Properties, Inc. The 20172020 MYLTIP awards utilize Boston Properties, Inc.’s total stockholder return (“TSR”)TSR over a three-year measurement period, on an annualized, compounded basis, as the performance metric. Earned awards will be basedrange from 0 to a maximum of 203,278 LTIP Units depending on Boston Properties, Inc.’s TSR relative to (i) the Cohen & Steers Realty Majors Portfolio Index (50% weight) and (ii) theFTSE Russell Nareit Office Index, adjusted to include Vornado Realty Trust, (50% weight). Earned awards will range from zero towith a maximumtarget of approximately $42.7 million depending on Boston Properties, Inc.’s TSR relative to the two indices, with four tiers (threshold: approximately $10.7 million; target: approximately $21.3 million; high: approximately $32.0 million; exceptional: approximately $42.7 million)101,638 LTIP Units and linear interpolation between tiers. Earned awards measured on the basis of relative TSR performance are subject to an absolute TSR component in the form of relatively simple modifiers that (A) reduce the level of earned awards in the event Boston Properties, Inc.’s annualized TSR is less than 0%zero and (B) cause some awards to be earned in the event Boston Properties, Inc.’s annualized TSR is more
than 12% even though on a relative basis alone Boston Properties, Inc.’s TSR would not result in any earned awards.
maximum. Earned awards (if any) will vest 50% on February 6, 20203, 2023 and 50% on February 6, 2021,3, 2024, based on continued employment. Vesting will be accelerated in the event of a change in control, termination of employment by Boston Properties, Inc. without cause, or termination of employment by the award recipient for good reason, death, disability or retirement. If there is a change of control prior to February 6, 2020,3, 2023, earned awards will be calculated based on TSR performance up to the date of the change of control. The 20172020 MYLTIP awards are in the form of LTIP Units issued on the grant date which (i) are subject to forfeiture to the extent awards are not earned and (ii) prior to the performance measurement date are only entitled to one-tenth (10%) of the regular quarterly distributions payable on common partnership units and no special distributions. units. Under ASC 718, the 20172020 MYLTIP awards have an aggregate value of approximately $17.7$13.7 million, which amount will generally be amortized into earnings over the four-year plan period under the graded vesting method. On February 3, 2017,6, 2020, the measurement period for the Company’s 20142017 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 27.7%83.8% of target, or an aggregate of approximately $3.5$17.6 million(after giving effect to voluntary employee separations and the unallocated reserve)separations). As a result, an aggregate of 447,386 2014270,942 2017 MYLTIP Units that had been previously granted were automatically forfeited. On February 4, 2016,9, 2019, the measurement period for the Company’s 20132016 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 109.5%69.5% of target, or an aggregate of approximately $13.5 million.$13.6 million (after giving effect to employee separations). As a result, 205,762 2013an aggregate of 364,980 2016 MYLTIP Units that had been previously granted were automatically forfeited. On February 6, 2015,4, 2018, the measurement period for the Company’s 2012 OPP Unit2015 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, was sufficient for employees to earn and therefore become eligible to vest in a portion of the 2012 OPP Unit awards. The final outperformance pool wasawards were determined to be 22.0% of target, or an aggregate of approximately $32.1$3.6 million or approximately 80% of the total maximum outperformance pool of $40.0 million.(after giving effect to employee separations). As a result, 174,549 2012 OPPan aggregate of 337,847 2015 MYLTIP Units that had been previously granted were automatically forfeited. On March 11, 2013, Boston Properties, Inc. announced that Owen D. Thomas would succeed Mortimer B. Zuckerman as its Chief Executive Officer, effective April 2, 2013. Mr. Zuckerman continued to serve as Executive Chairman for a transition period which was completed effective as of the close of business on December 31, 2014 and thereafter served as the non-executive Chairman of the Board of Boston Properties, Inc. until May 17, 2016. In connection with succession planning, Boston Properties, Inc. and Mr. Zuckerman entered into a Transition Benefits Agreement. Because Mr. Zuckerman remained employed by Boston Properties, Inc. through July 1, 2014, he was entitled to receive on January 1, 2015 a lump sum cash payment of $6.7 million and an equity award with a targeted value of approximately $11.1 million. The cash payment and equity award vested one-third on each of March 10, 2013, October 1, 2013 and July 1, 2014.
Boston Properties, Inc. issued 37,414, 22,06729,630, 26,503 and 34,15020,320 shares of restricted common stock and Boston Properties Limited Partnership issued 113,918, 147,872207,181, 181,919 and 190,563 (including 85,962 LTIP Units issued on January 1, 2015 to Mortimer B. Zuckerman, non-executive Chairman of the Board of Boston Properties, Inc., pursuant to the Transition Benefits Agreement dated March 10, 2013)205,838 LTIP Units to employees and non-employee directors under the 2012 Plan during the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. Boston Properties, Inc. did not issue any non-qualified stock options under the 2012 Plan during the years ended December 31, 2017, 20162020, 2019 and 2015.2018. Boston Properties Limited Partnership issued 400,000 2017203,278 2020 MYLTIP Units, 475,004 2016220,734 2019 MYLTIP Units and 375,000 2015342,659 2018 MYLTIP Units to employees under the 2012 Plan during the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. Employees and non-employee directors paid $0.01 per share of restricted common stock and $0.25 per LTIP Unit, OPP Unit and MYLTIP Unit. When issued, LTIP Units are not economically equivalent in value to a share of Common Stock, but over time can increase in value to one-for-one parity with Common Stock if there is sufficient appreciation in the value of the Company’s assets. The aggregate value of the LTIP Units is included in noncontrolling interests in the Consolidated Balance Sheets. GrantsSheets of Boston Properties, Inc. and Boston Properties Limited Partnership. A majority of the grants of restricted common stock and LTIP Units to employees vest in four4 equal annual installments. Restricted common stock is measured at fair value on the date of grant based on the number of shares granted and the closing price of Boston Properties, Inc.’s Common Stock on the date of grant as quoted on the New York Stock Exchange. Such value is recognized as an expense ratably over the corresponding employee service period. Non-qualified stock options, which are valued using the Black-Scholes option-pricing model, are recognized as an expense ratably over the corresponding employee service period. AsBecause the 2012 OPP Awards,Units and 2013 - 2020 MYLTIP Awards, 2014 MYLTIP Awards,
2015 MYLTIP Awards, 2016 MYLTIP Awards and 2017 MYLTIP AwardsUnits are subject to both a service condition and a market condition, the Company recognizes the related compensation expense related to the 2012 OPP Awards, 2013 MYLTIP Awards, 2014 MYLTIP Awards, 2015 MYLTIP Awards 2016 MYLTIP Awards and 2017 MYLTIP Awards under the graded vesting attribution method. Under the graded vesting attribution method, each portion of the award that vests at a different date is accounted for as a separate award and recognized over the period appropriate to that portion so that the compensation cost for each portion should be recognized in full by the time that portion vests. The Company recognizes forfeitures as they occur on its awards of stock-based compensation (See Note 2).compensation. Dividends paid on both vested and unvested shares of restricted stock are charged directly to Dividends in Excess of Earnings in Boston Properties, Inc.’s Consolidated Balance Sheets and Partners’ Capital in Boston Properties Limited Partnership’s Consolidated Balance Sheets. Aggregate stock-based compensation expense associated with restricted stock, non-qualified stock options, LTIP Units 2012 OPP Units, 2013 MYLTIP Units, 2014 MYLTIP Units,and 2015 MYLTIP Units, 2016 MYLTIP Units and 2017- 2020 MYLTIP Units was approximately $33.2$43.0 million, $30.6$39.8 million and $26.9$38.0 million for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. At December 31, 2017,2020, there was (1) an aggregate of approximately $19.2$25.4 million of unrecognized compensation expense related to unvested
restricted stock and LTIP Units and (2) an aggregate of approximately $10.3 million of unrecognized compensation expense related to unvested restricted stock, LTIP Units, 2013 MYLTIP Units and 2014 MYLTIP Units and (2) an aggregate of approximately $21.0 million of unrecognized compensation expense related to unvested 2015 MYLTIP Units, 2016 MYLTIP Units and 20172018 - 2020 MYLTIP Units that is expected to be recognized over a weighted-average period of approximately 2.32.1 years. The shares of restricted stock were valued at approximately $4.9$4.0 million ($130.32133.81 per share weighted-average), $2.5$3.5 million ($113.51131.27 per share weighted-average) and $4.8$2.4 million ($140.88119.27 per share weighted-average) for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. LTIP Units were valued using a Monte Carlo simulation method model in accordance with the provisions of ASC 718. LTIP Units issued during the years ended December 31, 2017, 20162020, 2019 and 20152018 were valued at approximately $13.6$26.3 million, $15.4$22.1 million and $13.5$22.7 million, (excluding the number issued to Mr. Zuckerman, as discussed above), respectively. The weighted-average per unit fair value of LTIP Unit grants in 2017, 20162020, 2019 and 20152018 was $119.41, $103.83$127.14, $121.50 and $128.94,$110.29, respectively. The per unit fair value of each LTIP Unit granted in 2017, 20162020, 2019 and 20152018 was estimated on the date of grant using the following assumptions; an expected life of 5.7 years, 5.7 years and 5.7 years, a risk-free interest rate of 2.14%1.47%, 1.61%2.68% and 1.47%2.63% and an expected price volatility of 28.0%18.0%, 33.0%27.0% and 26.0%27.0%, respectively. There were no0 non-qualified stock options granted during the years ended December 31, 2017, 20162020, 2019 and 2015.2018. A summary of the status of Boston Properties, Inc.’s stock options as of December 31, 2017, 20162020, 2019 and 20152018 and changes during the years then ended are presented below: | | | | | | | | Shares | | Weighted-Average Exercise Price | | | Shares | | Weighted-Average Exercise Price | | Outstanding at December 31, 2014 | | 553,312 |
| | $ | 97.21 |
| | Outstanding at December 31, 2017 | | Outstanding at December 31, 2017 | | 540,441 | | | $ | 96.35 | | Exercised | | (11,447 | ) | | $ | 92.50 |
| Exercised | | 0 | | | $ | 0 | | Special dividend adjustment | | 5,264 |
| | $ | 96.38 |
| | Outstanding at December 31, 2015 | | 547,129 |
| | $ | 96.38 |
| | Outstanding at December 31, 2018 | | Outstanding at December 31, 2018 | | 540,441 | | | $ | 96.35 | | Exercised | | — |
| | $ | — |
| Exercised | | (145,088) | | | $ | 96.27 | | Outstanding at December 31, 2016 | | 547,129 |
| | $ | 96.38 |
| | Outstanding at December 31, 2019 | | Outstanding at December 31, 2019 | | 395,353 | | | $ | 96.37 | | Exercised | | (6,688 | ) | | $ | 99.15 |
| Exercised | | (43,792) | | | $ | 91.60 | | Outstanding at December 31, 2017 | | 540,441 |
| | $ | 96.35 |
| | Outstanding at December 31, 2020 | | Outstanding at December 31, 2020 | | 351,561 | | | $ | 96.97 | |
The following table summarizes information about Boston Properties, Inc.’s stock options outstanding at December 31, 2017:2020: | | | | | | | | | | | | | | | | Options Outstanding | | Options Exercisable | Number Outstanding at 12/31/17 | | Weighted-Average Remaining Contractual Life | |
Exercise Price | | Number Exercisable at 12/31/17 | | Exercise Price | 118,502 |
| | 3.1 years | | $ | 86.86 |
| | 118,502 |
| | $ | 86.86 |
| 54,282 |
| | 5.3 years | | $ | 95.69 |
| | 54,282 |
| | $ | 95.69 |
| 202,030 |
| | 5.1 years | | $ | 98.46 |
| | 202,030 |
| | $ | 98.46 |
| 165,627 |
| | 4.1 years | | $ | 100.77 |
| | 165,627 |
| | $ | 100.77 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | Options Outstanding | | Options Exercisable | Number Outstanding at 12/31/20 | | Weighted-Average Remaining Contractual Life | | Exercise Price | | Number Exercisable at 12/31/20 | | Exercise Price | 54,003 | | | 0.1 years | | $ | 86.86 | | | 54,003 | | | $ | 86.86 | | 54,282 | | | 2.3 years | | $ | 95.69 | | | 54,282 | | | $ | 95.69 | | 133,834 | | | 2.1 years | | $ | 98.46 | | | 133,834 | | | $ | 98.46 | | 109,442 | | | 1.1 years | | $ | 100.77 | | | 109,442 | | | $ | 100.77 | |
The total intrinsic value of the outstanding and exercisable stock options as of December 31, 20172020 was approximately $18.2$0.4 million. In addition, Boston Properties, Inc. had 514,360395,353 and 465,371540,441 options exercisable at a weighted-average exercise price of $96.32$96.37 and $96.10$96.35 at December 31, 20162019 and 2015,2018, respectively. Boston Properties, Inc. adopted the 1999 Non-Qualified Employee Stock Purchase Plan (the “Stock Purchase Plan”) to encourage the ownership of Common Stock by eligible employees. The Stock Purchase Plan became effective on January 1, 1999 with an aggregate maximum of 250,000 shares of Common Stock available for issuance. The Stock Purchase Plan provides for eligible employees to purchase on the business day immediately following the end of the biannual purchase periods (i.e., January 1-June 30 and July 1-December 31) shares of Common Stock at a purchase price equal to 85% of the average closing prices of the Common Stock during the last ten business days of the purchase period. Boston Properties, Inc. issued 6,317, 5,6957,195, 5,862 and 6,1996,268 shares with the weighted averageweighted-average purchase price equal to $105.97$90.53 per share, $109.27$104.11 per share and $108.73$107.20 per share under the Stock Purchase Plan during the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. 18.
17. Related Party Transactions Prior to joining Boston Properties, Inc. effective January 2, 2014, Mr. John F. Powers provided commercial real estate brokerage services to the Company, on behalf of his prior employer, CBRE, in connection with certain leasing transactions. Mr. Powers received approximately $22,000, $315,000 and $616,000 during the years ended December 31, 2017, 2016 and 2015, respectively, in connection with these transactions. Mr. John F. Powers is an Executive Vice President of Boston Properties, Inc. and the Regional Manager of its New York office.
A firmfirm controlled by Mr. Raymond A. Ritchey’s brother was paid aggregate leasing commissions of approximately $368,000, $374,000$914,000, $21,000 and $384,000 for$921,000 during the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively, related to certain exclusive leasing arrangements for certain Northern Virginia properties. In addition, Mr. Ritchey’s brother is employed by a real estate brokerage firm and participated in brokerage activities for which the Company paid the firm approximately $3.4 million and $2.6 million for the years ended December 31, 2020 and 2019, respectively. Mr. Ritchey’s brother did not participate in brokerage activities related to such arrangement during the year ended December 31, 2018. Mr. Ritchey is a Senior Executive Vice President of Boston Properties, Inc. In accordance with Boston Properties, Inc.’s 2012 Plan, and as approved by its Board of Directors, five7 non-employee directors made elections to receive deferred stock units in lieu of cash fees for 2017. The deferred stock units will be settled in shares of common stock upon the cessation of such director’s service on the Board of Directors of Boston Properties, Inc.2020. As a result of these elections, the aggregate cash fees otherwise payable to a non-employee director during a fiscal quarter are converted into a number of deferred stock units equal to the aggregate cash fees divided by the last reported sales price of a share of Boston Properties, Inc.’s common stockCommon Stock on the last trading of the applicable fiscal quarter. The deferred stock units are also credited with dividend equivalents as dividends are paid by Boston Properties, Inc. The deferred stock units may be settled in shares of Common Stock upon the cessation of such director’s service on the Board of Directors of Boston Properties, Inc. The non-employee director compensation program provides, subject to certain conditions, the non-employee directors holding deferred stock units with the ability to elect, following cessation of their service on the Company’s Board of Directors, to diversify their investment elections into non-employer securities on a pre-tax basis and receive tax-deferred returns on such deferrals, which will ultimately be settled in cash. The Company’s obligation under the plan is that of an unsecured promise to pay the deferred compensation to the non-employee director in the future. At December 31, 2020 and 2019, the Company had maintained approximately $0.8 million and $0.7 million, respectively, in a separate account, which is not restricted as to its use. The Company’s liability under the plan is equal to the total amount of compensation deferred by the non-employee director and earnings on the deferred compensation pursuant to investments elected by the non-employee director. The Company’s liability as of December 31, 2020 and 2019 was approximately $0.8 million and $0.7 million, respectively, which is included in the accompanying Consolidated Balance Sheets. The terms of the non-employee director compensation program require the classification of these deferred stock units as temporary equity on the Consolidated Balance Sheets of Boston Properties, Inc. and Boston Properties Limited Partnership within Redeemable Deferred Stock Units. On May 17, 2016,21, 2019, in connection with the cessation of a director’s service on the Board of Directors of Boston Properties, Inc., Boston Properties, Inc. issued 1,50717,949 shares of common stockCommon Stock in settlement of a portion of the director’s outstanding deferred stock units. In addition, on September 3, 2019, the Company converted 4,917 of such director’s deferred stock units as a result of such director’s election to diversify their investment elections into non-employer securities. At December 31, 20172020 and 2016,2019, Boston Properties, Inc. had outstanding 105,47972,966 and 99,03560,676 deferred stock units, respectively.
19. Selected Interim Financial Information (unaudited)
Boston Properties, Inc.
The tables below reflect Boston Properties, Inc.’s selected quarterly information for the years ended December 31, 2017 and 2016.
| | | | | | | | | | | | | | | | | | | | 2017 Quarter Ended | | | March 31, | | June 30, | | September 30, | | December 31, | | | (in thousands, except for per share amounts) | Total revenue | | $ | 632,228 |
| | $ | 656,907 |
| | $ | 657,712 |
| | $ | 655,229 |
| Income before gains on sales of real estate | | $ | 115,431 |
| | $ | 163,243 |
| | $ | 144,813 |
| | $ | 131,331 |
| Net income attributable to Boston Properties, Inc. common shareholders | | $ | 97,083 |
| | $ | 133,709 |
| | $ | 117,337 |
| | $ | 103,829 |
| Income attributable to Boston Properties, Inc. per share—basic | | $ | 0.63 |
| | $ | 0.87 |
| | $ | 0.76 |
| | $ | 0.67 |
| Income attributable to Boston Properties, Inc. per share—diluted | | $ | 0.63 |
| | $ | 0.87 |
| | $ | 0.76 |
| | $ | 0.67 |
|
| | | | | | | | | | | | | | | | | | | | 2016 Quarter Ended | | | March 31, | | June 30, | | September 30, | | December 31, | | | (in thousands, except for per share amounts) | Total revenue | | $ | 665,985 |
| | $ | 623,546 |
| | $ | 625,228 |
| | $ | 636,061 |
| Income before gains on sales of real estate | | $ | 148,599 |
| | $ | 117,357 |
| | $ | 58,521 |
| | $ | 164,894 |
| Net income attributable to Boston Properties, Inc. common shareholders | | $ | 181,747 |
| | $ | 96,597 |
| | $ | 76,753 |
| | $ | 147,214 |
| Income attributable to Boston Properties, Inc. per share—basic | | $ | 1.18 |
| | $ | 0.63 |
| | $ | 0.50 |
| | $ | 0.96 |
| Income attributable to Boston Properties, Inc. per share—diluted | | $ | 1.18 |
| | $ | 0.63 |
| | $ | 0.50 |
| | $ | 0.96 |
|
Boston Properties Limited Partnership
The tables below reflect Boston Properties Limited Partnership’s selected quarterly information for the years ended December 31, 2017 and 2016.
| | | | | | | | | | | | | | | | | | | | 2017 Quarter Ended | | | March 31, | | June 30, | | September 30, | | December 31, | | | (in thousands, except for per unit amounts) | Total revenue | | $ | 632,228 |
| | $ | 656,907 |
| | $ | 657,712 |
| | $ | 655,229 |
| Income before gains on sales of real estate | | $ | 117,578 |
| | $ | 165,328 |
| | $ | 146,767 |
| | $ | 133,285 |
| Net income attributable to Boston Properties Limited Partnership common unitholders | | $ | 110,662 |
| | $ | 151,844 |
| | $ | 132,693 |
| | $ | 117,667 |
| Income attributable to Boston Properties Limited Partnership per unit—basic | | $ | 0.64 |
| | $ | 0.88 |
| | $ | 0.77 |
| | $ | 0.69 |
| Income attributable to Boston Properties Limited Partnership per unit—diluted | | $ | 0.64 |
| | $ | 0.88 |
| | $ | 0.77 |
| | $ | 0.68 |
|
| | | | | | | | | | | | | | | | | | | | 2016 Quarter Ended | | | March 31, | | June 30, | | September 30, | | December 31, | | | (in thousands, except for per unit amounts) | Total revenue | | $ | 665,985 |
| | $ | 623,546 |
| | $ | 625,228 |
| | $ | 636,061 |
| Income before gains on sales of real estate | | $ | 150,586 |
| | $ | 119,341 |
| | $ | 63,687 |
| | $ | 167,384 |
| Net income attributable to Boston Properties Limited Partnership common unitholders | | $ | 207,296 |
| | $ | 109,938 |
| | $ | 91,306 |
| | $ | 166,801 |
| Income attributable to Boston Properties Limited Partnership per unit—basic | | $ | 1.21 |
| | $ | 0.64 |
| | $ | 0.53 |
| | $ | 0.97 |
| Income attributable to Boston Properties Limited Partnership per unit—diluted | | $ | 1.21 |
| | $ | 0.64 |
| | $ | 0.53 |
| | $ | 0.97 |
|
20.18. Subsequent Events
On January 9, 2018, the Company completed the sale of its 500 E Street, S.W. property located in Washington, DC for a net contract sale price of approximately $118.6 million, which exceeds its carrying value. 500 E Street, S.W. is an approximately 262,000 net rentable square foot Class A office property. On January 24, 2018, the Company entered into a lease agreement with a tenant for a build-to-suit project with approximately 276,000 net rentable square feet of Class A office space at the Company's 17Fifty Presidents Street development project located in Reston, Virginia. The Company expects that the building will be complete29, 2021 and available for occupancy during the first quarter of 2020.
On January 31, 2018, the Company partially placed in-service its Signature at Reston development project comprised of 508 apartment units and retail space aggregating approximately 515,000 square feet located in Reston, Virginia.
On February 2, 2018 and February 6, 2018,2021, Boston Properties, Inc. issued an aggregate of 18,22633,449 shares of restricted common stockCommon Stock and Boston Properties Limited Partnership issued an aggregate of 195,546263,527 LTIP unitsUnits under the 2012 Plan to certain employees of Boston Properties, Inc.
On February 4, 2018,2, 2021, Boston Properties, Inc.’s Compensation Committee approved the 2021 Multi-Year Long-Term Incentive Program (the “2021 MYLTIP”) awards under Boston Properties, Inc.’s 2012 Plan to certain officers and employees of Boston Properties, Inc. Earned awards will range from 0 to a maximum of 352,021 LTIP Units depending on Boston Properties, Inc.’s relative and absolute TSR performance with a target of approximately 176,009 LTIP Units. Under ASC 718, the 2021 MYLTIP awards have an aggregate value of approximately $15.3 million. On February 5, 2021, the measurement period for the Company’s 20152018 MYLTIP awards ended and, based on Boston Properties, Inc.’s relative TSR performance, the final awards were determined to be 22.0%29.2% of target, or an aggregate of approximately $3.6$4.6 million(after (after giving effect to voluntary employee separations). As a result, an aggregate of 337,847 2015285,925 2018 MYLTIP Units that had been previously granted were automatically forfeited. On February 6, 2018,14, 2021, Boston Properties Inc.’s Compensation Committee approvedLimited Partnership used available cash to complete the 2018 Multi-Year Long-Term Incentive Program (the “2018 MYLTIP”) awards under Boston Properties, Inc.’s 2012 Plan to certain officers and employeesredemption of Boston Properties, Inc.$850.0 million in aggregate principal amount of its 4.125% senior notes due May 15, 2021. The 2018 MYLTIP awards utilize Boston Properties, Inc.’s total stockholder return (“TSR”) over a three-year measurement period, on an annualized, compounded basis, as the performance metric. Earned awards will be based on Boston Properties, Inc.’s TSR relative to (i) the Cohen & Steers Realty Majors Portfolio Index (50% weight) and (ii) the Nareit Office Index adjusted to include Vornado Realty Trust (50% weight). Earned awards will range from zero to a maximum ofredemption price was approximately $32.3 million depending on Boston Properties, Inc.’s TSR relative to the two indices, with a target of approximately $16.2 million and linear interpolation between zero and maximum. Earned awards measured on the basis of relative TSR performance are subject to an absolute TSR component in the form of relatively simple modifiers that (A) reduce the level of earned awards in the event Boston Properties, Inc.’s annualized TSR is less than 0% and (B) cause some awards to be earned in the event Boston Properties, Inc.’s annualized TSR is more than 12% even though on a relative basis alone Boston Properties, Inc.’s TSR would not result in any earned awards. Earned awards (if any) will vest 50% on February 5, 2021 and 50% on February 5, 2022, based on continued employment. Vesting will be accelerated in the event of a change in control, termination of employment by Boston Properties, Inc. without cause, or termination of employment by the award recipient for good reason, death, disability or retirement. If there is a change of control prior to February 5, 2021, earned awards will be calculated based on TSR performance up to the date of the change of control. The 2018 MYLTIP awards are in the form of LTIP Units issued on the grant date which (i) are subject to forfeiture to the extent awards are not earned and (ii) prior to the performance measurement date are only entitled to one-tenth (10%) of the regular quarterly distributions payable on common partnership units. Under ASC 718, the 2018 MYLTIP awards have an aggregate value of approximately $13.3$858.7 million, which amount will generally be amortized into earnings overwas equal to par plus approximately $8.7 million of accrued and unpaid interest to, but not including, the four-year plan period under the graded vesting method.redemption date. On February 23, 2018, the Company entered into a lease agreement with Fannie Mae to lease approximately 850,000 net rentable square feet
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosuresDisclosures. None. Item 9A. Controls and ProceduresProcedures. Boston Properties, Inc. As of the end of the period covered by this report, an evaluation was carried out by our management, with the participation of Boston Properties, Inc.’s Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, Boston Properties, Inc.’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in Boston Properties, Inc.’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fourth quarter of Boston Properties, Inc.’s fiscal year ended December 31, 20172020 that has materially affected, or is reasonably likely to materially affect, Boston Properties, Inc.’s internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting is set forth on page 112 of this Annual Report on Form 10-K and is incorporated herein by reference. Boston Properties Limited Partnership As of the end of the period covered by this report, an evaluation was carried out by the management of Boston Properties, Inc., the sole general partner of Boston Properties Limited Partnership, with the participation of its Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of ourits disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of Boston Properties, Inc. concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in its internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fourth quarter of its fiscal year ended December 31, 20172020 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting is set forth on page 121125 of this Annual Report on Form 10-K and is incorporated herein by reference. Item 9B. Other InformationInformation. None.
PART III
Item 10. Directors, Executive Officers and Corporate GovernanceGovernance. The information required by Item 10 will be included in the Proxy Statement to be filed relating to Boston Properties, Inc.’s 20182021 Annual Meeting of Stockholders and is incorporated herein by reference. Item 11. Executive CompensationCompensation. The information required by Item 11 will be included in the Proxy Statement to be filed relating to Boston Properties, Inc.’s 20182021 Annual Meeting of Stockholders and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersMatters. The following table summarizes Boston Properties, Inc.’s equity compensation plans as of December 31, 2017.2020. Equity Compensation Plan Information
| | Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | | | (a) | | (b) | | (c) | | | | (a) | | (b) | | (c) | | Equity compensation plans approved by security holders (1) | | 3,989,048 | | | (2) | $ | 96.35 | | | (2) | 9,107,022 | | (3) | | Equity compensation plans not approved by security holders (4) | | N/A | | | N/A | | | 97,477 | | | | Equity compensation plans approved by security holders(1) | | Equity compensation plans approved by security holders(1) | | 3,886,774 | (2) | $96.97 | | (2) | 8,069,531 | | (3) | Equity compensation plans not approved by security holders(4) | | Equity compensation plans not approved by security holders(4) | | N/A | | N/A | | 78,152 | | | Total | | 3,989,048 | | | $ | 96.35 | | | 9,204,499 | | | Total | | 3,886,774 | | $96.97 | | | 8,147,683 | |
______________ | | (1) | Includes information related to BXP’s 1997 Plan and 2012 Plan. |
| | (2) | Includes (a) 540,441 shares of common stock issuable upon the exercise of outstanding options (all of which are vested and exercisable), (b) 818,343 long term incentive units (LTIP units) (522,531 of which are vested) that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock, (c) 1,284,807 common units issued upon conversion of LTIP units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock, (d) 366,618 2015 MYLTIP Units that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock, (e) 473,360 2016 MYLTIP Units that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock, (f) 400,000 2017 MYLTIP Units that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock and (g) 105,479 deferred stock units which were granted pursuant to elections by certain of BXP’s non-employee directors to defer all cash compensation to be paid to such directors and to receive their deferred cash compensation in shares of BXP’s common stock upon their retirement from its Board of Directors. Does not include 66,098 shares of restricted stock, as they have been reflected in BXP’s total shares outstanding. Because there is no exercise price associated with LTIP units, 2015 MYLTIP Units, 2016 MYLTIP Units, 2017 MYLTIP Units or deferred stock units, such shares are not included in the weighed-average exercise price calculation. |
| | (3) | Represents awards available for issuance under BXP’s 2012 Plan at a 1.0 conversion ratio. “Full-value” awards (i.e., awards other than stock options) are multiplied by a 2.32 conversion ratio to calculate the number of shares available under the 2012 Plan that are used for each full-value award, as opposed to a 1.0 conversion ratio for each stock option awarded under the 2012 Plan. |
| | (4) | Includes information related to the 1999 Non-Qualified Employee Stock Purchase Plan (ESPP). The ESPP was adopted by the Board of Directors of BXP on October 29, 1998. The ESPP has not been approved by BXP’s stockholders. The ESPP is available to all our employees that are employed on the first day of the purchase period. Under the ESPP, each eligible employee may purchase shares of our common stock at semi-annual intervals each year at a purchase price equal to 85% of the average closing prices of our common stock on the New York Stock Exchange during the last ten business days of the purchase period. Each eligible employee may contribute no more than $10,000 per year to purchase our common stock under the ESPP. |
(1)Includes information related to BXP’s 1997 Plan and 2012 Plan.
(2)Includes (a) 351,561 shares of common stock issuable upon the exercise of outstanding options (all of which are vested and exercisable), (b) 1,336,115 long term incentive units (LTIP units) (914,572 of which are vested) that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock, (c) 1,366,743 common units issued upon conversion of LTIP units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock, (d) 336,195 2018 MYLTIP Awards that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock, (e) 219,916 2019 MYLTIP Awards that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock, (f) 203,278 2020 MYLTIP Awards that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to BPLP for redemption and acquired by BXP for shares of its common stock and (g) 72,966 deferred stock units which were granted pursuant to elections by certain of BXP’s non-employee directors to defer all cash compensation to be paid to such directors and to receive their deferred cash compensation in shares of BXP’s common stock upon their retirement from its Board of Directors. Does not include 55,616 shares of restricted stock, as they have been reflected in BXP’s total shares outstanding. Because there is no exercise price associated with LTIP units, common units, 2018 MYLTIP Awards, 2019 MYLTIP Awards, 2020 MYLTIP Awards or deferred stock units, such shares are not included in the weighed-average exercise price calculation. (3)Represents awards available for issuance under BXP’s 2012 Plan. “Full-value” awards (i.e., awards other than stock options) are multiplied by a 2.32 conversion ratio to calculate the number of shares available under the 2012 Plan that are used for each full-value award, as opposed to a 1.0 conversion ratio for each stock option awarded under the 2012 Plan. (4)Includes information related to the 1999 Non-Qualified Employee Stock Purchase Plan (ESPP). The ESPP was adopted by the Board of Directors of BXP on October 29, 1998. The ESPP has not been approved by BXP’s stockholders. The ESPP is available to all our employees that are employed on the first day of the purchase period. Under the ESPP, each
eligible employee may purchase shares of our common stock at semi-annual intervals each year at a purchase price equal to 85% of the average closing prices of our common stock on the New York Stock Exchange during the last ten business days of the purchase period. Each eligible employee may contribute no more than $10,000 per year to purchase our common stock under the ESPP.
Additional information concerning security ownership of certain beneficial owners and management required by Item 12 will be included in the Proxy Statement to be filed relating to Boston Properties, Inc.’s 20182021 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director IndependenceIndependence. The information required by Item 13 will be included in the Proxy Statement to be filed relating to Boston Properties, Inc.’s 20182021 Annual Meeting of Stockholders and is incorporated herein by reference. Item 14. Principal Accountant Fees and ServicesServices. The information required by Item 14 will be included in the Proxy Statement to be filed relating to Boston Properties, Inc.’s 20182021 Annual Meeting of Stockholders and is incorporated herein by reference.
PART IV
Item 15. Exhibits and Financial Statement SchedulesSchedules. (a) Financial Statement Schedule | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston Properties, Inc. Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | Property Name | | Type | | Location | | Encumbrances | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | Land | | Building | | | 767 Fifth Avenue (the General Motors Building) | | Office | | New York, NY | | $ | 2,277,522 | | | $ | 1,796,252 | | | $ | 1,532,654 | | | $ | 227,450 | | | $ | 1,796,252 | | | $ | 1,760,104 | | | $ | — | | | $ | — | | | $ | 3,556,356 | | | $ | 364,145 | | | 1968/2019 | | 2013 | | (1) | Prudential Center | | Office | | Boston, MA | | — | | | 92,077 | | | 948,357 | | | 573,187 | | | 115,638 | | | 1,480,302 | | | 17,681 | | | — | | | 1,613,621 | | | 634,402 | | | 1965/1993/2002/2016-2017 | | 1998/1999/2000 | | (1) | Embarcadero Center | | Office | | San Francisco, CA | | — | | | 179,697 | | | 847,410 | | | 469,860 | | | 195,987 | | | 1,300,980 | | | — | | | — | | | 1,496,967 | | | 680,507 | | | 1970/1989 | | 1998-1999 | | (1) | 399 Park Avenue | | Office | | New York, NY | | — | | | 339,200 | | | 700,358 | | | 340,960 | | | 354,107 | | | 1,026,411 | | | — | | | — | | | 1,380,518 | | | 387,217 | | | 1961/2018 | | 2002 | | (1) | 601 Lexington Avenue | | Office | | New York, NY | | 630,068 | | | 241,600 | | | 494,782 | | | 446,950 | | | 289,639 | | | 663,694 | | | — | | | 229,999 | | | 1,183,332 | | | 284,477 | | | 1977/1997 | | 2001 | | (1) | Salesforce Tower | | Office | | San Francisco, CA | | — | | | 200,349 | | | 946,205 | | | 5,355 | | | 200,349 | | | 951,560 | | | — | | | — | | | 1,151,909 | | | 68,918 | | | 2018 | | 2013 | | (1) | 200 Clarendon Street and Garage | | Office | | Boston, MA | | — | | | 219,543 | | | 667,884 | | | 218,821 | | | 251,374 | | | 854,874 | | | — | | | — | | | 1,106,248 | | | 244,882 | | | 1976 | | 2010 | | (1) | 250 West 55th Street | | Office | | New York, NY | | — | | | 285,263 | | | 603,167 | | | 51,860 | | | 285,263 | | | 655,027 | | | — | | | — | | | 940,290 | | | 138,004 | | | 2014 | | 2007 | | (1) | 100 Federal Street | | Office | | Boston, MA | | — | | | 131,067 | | | 435,954 | | | 111,196 | | | 131,067 | | | 547,150 | | | — | | | — | | | 678,217 | | | 141,629 | | | 1971-1975/2017 | | 2012 | | (1) | Times Square Tower | | Office | | New York, NY | | — | | | 165,413 | | | 380,438 | | | 108,206 | | | 169,193 | | | 484,864 | | | — | | | — | | | 654,057 | | | 217,845 | | | 2004 | | 2000 | | (1) | Carnegie Center | | Office | | Princeton, NJ | | — | | | 142,666 | | | 316,856 | | | 153,797 | | | 94,240 | | | 463,959 | | | 55,120 | | | — | | | 613,319 | | | 221,323 | | | 1983-2016 | | 1998/1999/2000/2007/2014/2017/2019 | | (1) | Atlantic Wharf | | Office | | Boston, MA | | — | | | 63,988 | | | 454,537 | | | 18,538 | | | 63,988 | | | 473,075 | | | — | | | — | | | 537,063 | | | 146,860 | | | 2011 | | 2007 | | (1) | 599 Lexington Avenue | | Office | | New York, NY | | — | | | 81,040 | | | 100,507 | | | 214,275 | | | 87,852 | | | 307,970 | | | — | | | — | | | 395,822 | | | 193,058 | | | 1986 | | 1997 | | (1) | 510 Madison Avenue | | Office | | New York, NY | | — | | | 103,000 | | | 253,665 | | | 28,446 | | | 103,000 | | | 282,111 | | | — | | | — | | | 385,111 | | | 81,517 | | | 2012 | | 2010 | | (1) | Fountain Square | | Office | | Reston, VA | | — | | | 56,853 | | | 306,298 | | | 21,030 | | | 56,853 | | | 327,328 | | | — | | | — | | | 384,181 | | | 90,047 | | | 1986-1990 | | 2012 | | (1) | 680 Folsom Street | | Office | | San Francisco, CA | | — | | | 72,545 | | | 219,766 | | | 7,917 | | | 72,545 | | | 227,683 | | | — | | | — | | | 300,228 | | | 55,319 | | | 2014 | | 2012 | | (1) | 145 Broadway | | Office | | Cambridge, MA | | — | | | 121 | | | 273,013 | | | 25,712 | | | 23,367 | | | 275,479 | | | — | | | — | | | 298,846 | | | 9,941 | | | 2019 | | 1997 | | (1) | 2200 Pennsylvania Avenue | | Office | | Washington, DC | | — | | | 0 | | | 183,541 | | | 112,436 | | | 107,356 | | | 188,621 | | | — | | | — | | | 295,977 | | | 66,072 | | | 2011 | | 2008 | | (1) | South of Market and Democracy Tower | | Office | | Reston, VA | | — | | | 13,603 | | | 237,479 | | | 41,163 | | | 13,687 | | | 278,558 | | | — | | | — | | | 292,245 | | | 107,358 | | | 2008-2009 | | 2003 | | (1) | 601 Massachusetts Avenue | | Office | | Washington, DC | | — | | | 95,310 | | | 165,173 | | | 3,945 | | | 95,322 | | | 169,106 | | | — | | | — | | | 264,428 | | | 30,743 | | | 2016 | | 2008 | | (1) | Bay Colony Corporate Center | | Office | | Waltham, MA | | — | | | 18,789 | | | 148,451 | | | 81,302 | | | 18,789 | | | 229,753 | | | — | | | — | | | 248,542 | | | 89,232 | | | 1985-1989 | | 2011 | | (1) | 535 Mission Street | | Office | | San Francisco, CA | | — | | | 40,933 | | | 148,378 | | | 3,287 | | | 40,933 | | | 151,665 | | | — | | | — | | | 192,598 | | | 31,953 | | | 2015 | | 2013 | | (1) | Mountain View Research Park | | Office | | Mountain View, CA | | — | | | 95,066 | | | 68,373 | | | 18,479 | | | 95,066 | | | 86,852 | | | — | | | — | | | 181,918 | | | 21,725 | | | 1977-1981/2007-2013 | | 2013 | | (1) | Reservoir Place | | Office | | Waltham, MA | | — | | | 18,605 | | | 104,124 | | | 57,154 | | | 20,108 | | | 159,775 | | | — | | | — | | | 179,883 | | | 76,993 | | | 1955/1987/2017 | | 1997/1998 | | (1) | 1330 Connecticut Avenue | | Office | | Washington, DC | | — | | | 25,982 | | | 82,311 | | | 37,049 | | | 27,135 | | | 118,207 | | | — | | | — | | | 145,342 | | | 38,000 | | | 1984/2018 | | 2004 | | (1) | One Freedom Square | | Office | | Reston, VA | | — | | | 9,929 | | | 84,504 | | | 39,884 | | | 11,293 | | | 123,024 | | | — | | | — | | | 134,317 | | | 62,808 | | | 2000 | | 2003 | | (1) | Kingstowne Towne Center | | Office | | Alexandria, VA | | — | | | 18,021 | | | 109,038 | | | 3,299 | | | 18,062 | | | 112,296 | | | — | | | — | | | 130,358 | | | 46,469 | | | 2003-2006 | | 2007 | | (1) |
Boston Properties, Inc. Schedule III - Real Estate and Accumulated Depreciation December 31, 2017 (dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property Name | | Type | | Location | | Encumbrances | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | Land | | Building | | | 767 Fifth Avenue (the General Motors Building) | | Office | | New York, NY | | $ | 2,267,041 |
| | $ | 1,796,252 |
| | $ | 1,532,654 |
| | $ | 135,559 |
| | $ | 1,796,252 |
| | $ | 1,668,213 |
| | $ | — |
| | $ | — |
| | $ | 3,464,465 |
| | $ | 222,981 |
| | 1968 | | 2013 | | (1) | Prudential Center | | Office | | Boston, MA | | — |
| | 92,077 |
| | 948,357 |
| | 501,709 |
| | 115,638 |
| | 1,426,505 |
| | — |
| | — |
| | 1,542,143 |
| | 511,605 |
| | 1965/1993/2002/2016-2017 | | 1998/1999/2000 | | (1) | Embarcadero Center | | Office | | San Francisco, CA | | — |
| | 179,697 |
| | 847,410 |
| | 366,780 |
| | 195,987 |
| | 1,197,900 |
| | — |
| | — |
| | 1,393,887 |
| | 596,100 |
| | 1970/1989 | | 1998-1999 | | (1) | 399 Park Avenue | | Office | | New York, NY | | — |
| | 339,200 |
| | 700,358 |
| | 181,418 |
| | 354,107 |
| | 866,869 |
| | — |
| | — |
| | 1,220,976 |
| | 310,262 |
| | 1961 | | 2002 | | (1) | 601 Lexington Avenue | | Office | | New York, NY | | 672,142 |
| | 241,600 |
| | 494,782 |
| | 290,590 |
| | 289,639 |
| | 634,134 |
| | — |
| | 103,199 |
| | 1,026,972 |
| | 254,932 |
| | 1977/1997 | | 2001 | | (1) | 200 Clarendon Street and Garage | | Office | | Boston, MA | | — |
| | 219,543 |
| | 667,884 |
| | 139,189 |
| | 219,616 |
| | 799,991 |
| | 7,009 |
| | — |
| | 1,026,616 |
| | 161,471 |
| | 1976 | | 2010 | | (1) | 250 West 55th Street | | Office | | New York, NY | | — |
| | 285,263 |
| | 603,167 |
| | 43,296 |
| | 285,263 |
| | 646,463 |
| | — |
| | — |
| | 931,726 |
| | 72,058 |
| | 2014 | | 2007 | | (1) | Carnegie Center | | Office | | Princeton, NJ | | — |
| | 107,997 |
| | 389,359 |
| | 157,960 |
| | 108,948 |
| | 543,514 |
| | 2,854 |
| | — |
| | 655,316 |
| | 228,171 |
| | 1983-2016 | | 1998/1999/2000/2007/2014/2017 | | (1) | 100 Federal Street | | Office | | Boston, MA | | — |
| | 131,067 |
| | 435,954 |
| | 79,035 |
| | 131,067 |
| | 514,989 |
| | — |
| | — |
| | 646,056 |
| | 97,630 |
| | 1971-1975/2017 | | 2012 | | (1) | Times Square Tower | | Office | | New York, NY | | — |
| | 165,413 |
| | 380,438 |
| | 87,050 |
| | 169,193 |
| | 463,708 |
| | — |
| | — |
| | 632,901 |
| | 191,435 |
| | 2004 | | 2000 | | (1) | Atlantic Wharf | | Office | | Boston, MA | | — |
| | 63,988 |
| | 454,537 |
| | 17,473 |
| | 63,988 |
| | 472,010 |
| | — |
| | — |
| | 535,998 |
| | 101,525 |
| | 2011 | | 2007 | | (1) | Fountain Square | | Office | | Reston, VA | | — |
| | 56,853 |
| | 306,298 |
| | 17,834 |
| | 56,853 |
| | 320,474 |
| | 3,658 |
| | — |
| | 380,985 |
| | 60,098 |
| | 1986-1990 | | 2012 | | (1) | 510 Madison Avenue | | Office | | New York, NY | | — |
| | 103,000 |
| | 253,665 |
| | 23,875 |
| | 103,000 |
| | 277,540 |
| | — |
| | — |
| | 380,540 |
| | 54,056 |
| | 2012 | | 2010 | | (1) | 599 Lexington Avenue | | Office | | New York, NY | | — |
| | 81,040 |
| | 100,507 |
| | 165,350 |
| | 87,852 |
| | 259,045 |
| | — |
| | — |
| | 346,897 |
| | 165,739 |
| | 1986 | | 1997 | | (1) | 680 Folsom Street | | Office | | San Francisco, CA | | — |
| | 72,545 |
| | 219,766 |
| | 7,545 |
| | 72,545 |
| | 227,311 |
| | — |
| | — |
| | 299,856 |
| | 30,577 |
| | 2014 | | 2012 | | (1) | South of Market and Democracy Tower | | Office | | Reston, VA | | — |
| | 13,603 |
| | 237,479 |
| | 14,991 |
| | 13,687 |
| | 252,386 |
| | — |
| | — |
| | 266,073 |
| | 87,711 |
| | 2008-2009 | | 2003 | | (1) | 601 Massachusetts Avenue | | Office | | Washington, DC | | — |
| | 95,310 |
| | 165,173 |
| | 2,353 |
| | 95,322 |
| | 167,514 |
| | — |
| | — |
| | 262,836 |
| | 12,177 |
| | 2016 | | 2008 | | (1) | Bay Colony Corporate Center | | Office | | Waltham, MA | | — |
| | 18,789 |
| | 148,451 |
| | 73,418 |
| | 18,789 |
| | 221,869 |
| | — |
| | — |
| | 240,658 |
| | 57,320 |
| | 1985-1989 | | 2011 | | (1) | Gateway Center | | Office | | San Francisco, CA | | — |
| | 28,255 |
| | 139,245 |
| | 59,019 |
| | 30,627 |
| | 195,892 |
| | — |
| | — |
| | 226,519 |
| | 102,634 |
| | 1984/1986/2002 | | 1999 | | (1) | 535 Mission Street | | Office | | San Francisco, CA | | — |
| | 40,933 |
| | 148,378 |
| | 3,259 |
| | 40,933 |
| | 151,637 |
| | — |
| | — |
| | 192,570 |
| | 14,637 |
| | 2015 | | 2013 | | (1) | 2200 Pennsylvania Avenue | | Office | | Washington, DC | | — |
| | — |
| | 183,541 |
| | 4,907 |
| | — |
| | 188,448 |
| | — |
| | — |
| | 188,448 |
| | 46,780 |
| | 2011 | | 2008 | | (1) | Mountain View Research Park | | Office | | Mountain View, CA | | — |
| | 95,066 |
| | 68,373 |
| | 8,136 |
| | 95,066 |
| | 76,509 |
| | — |
| | — |
| | 171,575 |
| | 15,146 |
| | 1977-1981/2007-2013 | | 2013 | | (1) | Reservoir Place | | Office | | Waltham, MA | | — |
| | 18,605 |
| | 104,124 |
| | 43,255 |
| | 20,108 |
| | 145,876 |
| | — |
| | — |
| | 165,984 |
| | 66,230 |
| | 1955/1987/2017 | | 1997/1998 | | (1) | 1330 Connecticut Avenue | | Office | | Washington, DC | | — |
| | 25,982 |
| | 82,311 |
| | 32,839 |
| | 27,135 |
| | 113,997 |
| | — |
| | — |
| | 141,132 |
| | 22,530 |
| | 1984 | | 2004 | | (1) | 1333 New Hampshire Avenue | | Office | | Washington, DC | | — |
| | 34,032 |
| | 85,660 |
| | 11,473 |
| | 35,382 |
| | 95,783 |
| | — |
| | — |
| | 131,165 |
| | 40,499 |
| | 1996 | | 2003 | | (1) | Kingstowne Towne Center | | Office | | Alexandria, VA | | — |
| | 18,021 |
| | 109,038 |
| | 1,371 |
| | 18,062 |
| | 110,368 |
| | — |
| | — |
| | 128,430 |
| | 39,048 |
| | 2003-2006 | | 2007 | | (1) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston Properties, Inc. Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | Property Name | | Type | | Location | | Encumbrances | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | Land | | Building | | | One and Two Reston Overlook | | Office | | Reston, VA | | — | | | 16,456 | | | 66,192 | | | 46,762 | | | 16,179 | | | 113,231 | | | — | | | — | | | 129,410 | | | 57,441 | | | 1999 | | 2000 | | (1) | Weston Corporate Center | | Office | | Weston, MA | | — | | | 25,753 | | | 92,312 | | | (5) | | | 25,854 | | | 92,206 | | | — | | | — | | | 118,060 | | | 32,278 | | | 2010 | | 2001 | | (1) | Two Freedom Square | | Office | | Reston, VA | | — | | | 13,930 | | | 77,739 | | | 25,510 | | | 15,420 | | | 101,759 | | | — | | | — | | | 117,179 | | | 53,885 | | | 2001 | | 2003 | | (1) | 17Fifty Presidents Street | | Office | | Reston, VA | | — | | | 0 | | | 113,362 | | | 0 | | | 0 | | | 113,362 | | | — | | | — | | | 113,362 | | | 3,466 | | | 2020 | | 2013 | | (1) | 140 Kendrick Street | | Office | | Needham, MA | | — | | | 18,095 | | | 66,905 | | | 26,458 | | | 19,092 | | | 92,366 | | | — | | | — | | | 111,458 | | | 35,918 | | | 2000 | | 2004 | | (1) | Discovery Square | | Office | | Reston, VA | | — | | | 11,198 | | | 71,782 | | | 20,742 | | | 12,533 | | | 91,189 | | | — | | | — | | | 103,722 | | | 45,920 | | | 2001 | | 2003 | | (1) | 355 Main Street | | Office | | Cambridge, MA | | — | | | 18,863 | | | 53,346 | | | 27,593 | | | 21,173 | | | 78,629 | | | — | | | — | | | 99,802 | | | 29,479 | | | 1981/1996/2013 | | 2006 | | (1) | 880 & 890 Winter Street | | Office | | Waltham, MA | | — | | | 29,510 | | | 65,812 | | | 1,367 | | | 29,510 | | | 66,561 | | | 618 | | | — | | | 96,689 | | | 5,706 | | | 1998-1999 | | 2019 | | (1) | 10 CityPoint | | Office | | Waltham, MA | | — | | | 1,953 | | | 85,752 | | | 4,744 | | | 2,290 | | | 90,159 | | | — | | | — | | | 92,449 | | | 14,073 | | | 2016 | | 1997 | | (1) | 90 Broadway | | Office | | Cambridge, MA | | — | | | 19,104 | | | 52,078 | | | 18,077 | | | 20,785 | | | 68,474 | | | — | | | — | | | 89,259 | | | 24,200 | | | 1983/1998/2013 | | 2006 | | (1) | 230 CityPoint | | Office | | Waltham, MA | | — | | | 13,189 | | | 49,823 | | | 23,958 | | | 13,807 | | | 73,163 | | | — | | | — | | | 86,970 | | | 32,678 | | | 1992 | | 2005 | | (1) | 77 CityPoint | | Office | | Waltham, MA | | — | | | 13,847 | | | 60,383 | | | 11,937 | | | 14,023 | | | 72,144 | | | — | | | — | | | 86,167 | | | 29,691 | | | 2008 | | 2001 | | (1) | Waltham Weston Corporate Center | | Office | | Waltham, MA | | — | | | 10,385 | | | 60,694 | | | 13,151 | | | 11,097 | | | 73,133 | | | — | | | — | | | 84,230 | | | 38,118 | | | 2003 | | 1999 | | (1) | 3625-3635 Peterson Way | | Office | | Santa Clara, CA | | — | | | 63,206 | | | 14,879 | | | 907 | | | 63,206 | | | 14,879 | | | 907 | | | — | | | 78,992 | | | 14,198 | | | 1979 | | 2016 | | (1) | 20 CityPoint | | Office | | Waltham, MA | | — | | | 4,887 | | | 72,764 | | | 0 | | | 4,887 | | | 72,764 | | | — | | | — | | | 77,651 | | | 3,325 | | | 2020 | | 2007 | | (1) | 2440 West El Camino Real | | Office | | Mountain View, CA | | — | | | 16,741 | | | 51,285 | | | 5,518 | | | 16,741 | | | 56,803 | | | — | | | — | | | 73,544 | | | 15,215 | | | 1987/2003 | | 2011 | | (1) | 191 Spring Street | | Office | | Lexington, MA | | — | | | 2,850 | | | 59,751 | | | 7,543 | | | 3,151 | | | 66,993 | | | — | | | — | | | 70,144 | | | 24,275 | | | 1971/1995/2018 | | 1997 | | (1) | 300 Binney Street | | Office | | Cambridge, MA | | — | | | 18,080 | | | 51,262 | | | 140 | | | 18,080 | | | 51,402 | | | — | | | — | | | 69,482 | | | 12,842 | | | 2013 | | 2009 | | (1) | Wisconsin Place | | Office | | Chevy Chase, MD | | — | | | 0 | | | 53,349 | | | 14,771 | | | 0 | | | 68,120 | | | — | | | — | | | 68,120 | | | 28,305 | | | 2009 | | 2004 | | (1) | Reston Corporate Center | | Office | | Reston, VA | | — | | | 9,135 | | | 50,857 | | | 6,236 | | | 10,148 | | | 56,080 | | | — | | | — | | | 66,228 | | | 31,405 | | | 1984 | | 1998 | | (1) | 200 West Street | | Office | | Waltham, MA | | — | | | 16,148 | | | 24,983 | | | 21,102 | | | 16,813 | | | 30,496 | | | 317 | | | 14,607 | | | 62,233 | | | 18,585 | | | 1999 | | 1997 | | (1) | 255 Main Street | | Office | | Cambridge, MA | | — | | | 134 | | | 25,110 | | | 34,107 | | | 548 | | | 58,803 | | | — | | | — | | | 59,351 | | | 37,353 | | | 1987 | | 1997 | | (1) | University Place | | Office | | Cambridge, MA | | 1,491 | | | 0 | | | 37,091 | | | 16,745 | | | 6,909 | | | 46,927 | | | — | | | — | | | 53,836 | | | 30,983 | | | 1985 | | 1998 | | (1) | Sumner Square | | Office | | Washington, DC | | — | | | 624 | | | 28,745 | | | 20,396 | | | 2,251 | | | 47,514 | | | — | | | — | | | 49,765 | | | 28,329 | | | 1985 | | 1999 | | (1) | Capital Gallery | | Office | | Washington, DC | | — | | | 4,725 | | | 29,565 | | | 8,679 | | | 8,662 | | | 34,307 | | | — | | | — | | | 42,969 | | | 21,150 | | | 1981/2006 | | 2007 | | (1) | North First Business Park | | Office | | San Jose, CA | | — | | | 23,398 | | | 13,069 | | | 4,580 | | | 23,377 | | | 17,670 | | | — | | | — | | | 41,047 | | | 16,749 | | | 1981 | | 2007 | | (1) | 150 Broadway | | Office | | Cambridge, MA | | — | | | 850 | | | 25,042 | | | 2,253 | | | 1,323 | | | 26,822 | | | — | | | — | | | 28,145 | | | 14,154 | | | 1999 | | 1997 | | (1) | 105 Broadway | | Office | | Cambridge, MA | | — | | | 1,299 | | | 12,943 | | | 12,723 | | | 2,395 | | | 24,570 | | | — | | | — | | | 26,965 | | | 13,041 | | | 1990 | | 1997 | | (1) | Lexington Office Park | | Office | | Lexington, MA | | — | | | 998 | | | 1,426 | | | 18,567 | | | 1,264 | | | 19,727 | | | — | | | — | | | 20,991 | | | 15,289 | | | 1982 | | 1997 | | (1) | 201 Spring Street | | Office | | Lexington, MA | | — | | | 2,849 | | | 15,303 | | | 1,124 | | | 3,124 | | | 16,152 | | | — | | | — | | | 19,276 | | | 8,985 | | | 1997 | | 1997 | | (1) | The Point | | Office | | Waltham, MA | | — | | | 6,395 | | | 10,040 | | | 421 | | | 6,492 | | | 10,364 | | | — | | | — | | | 16,856 | | | 1,667 | | | 2015 | | 2007 | | (1) | 690 Folsom Street | | Office | | San Francisco, CA | | — | | | 3,219 | | | 11,038 | | | 1,157 | | | 3,219 | | | 12,195 | | | — | | | — | | | 15,414 | | | 2,778 | | | 2015 | | 2012 | | (1) | 33 Hayden Avenue | | Office | | Lexington, MA | | — | | | 266 | | | 3,234 | | | 11,566 | | | 425 | | | 14,641 | | | — | | | — | | | 15,066 | | | 5,674 | | | 1979 | | 1997 | | (1) | 92-100 Hayden Avenue | | Office | | Lexington, MA | | — | | | 594 | | | 6,748 | | | 7,669 | | | 802 | | | 14,209 | | | — | | | — | | | 15,011 | | | 12,507 | | | 1985 | | 1997 | | (1) | 181 Spring Street | | Office | | Lexington, MA | | — | | | 1,066 | | | 9,520 | | | 2,177 | | | 1,160 | | | 11,603 | | | — | | | — | | | 12,763 | | | 5,908 | | | 1999 | | 1997 | | (1) | 195 West Street | | Office | | Waltham, MA | | — | | | 1,611 | | | 6,652 | | | 4,221 | | | 1,858 | | | 10,626 | | | — | | | — | | | 12,484 | | | 8,589 | | | 1990 | | 1997 | | (1) |
Boston Properties, Inc. Schedule III - Real Estate and Accumulated Depreciation December 31, 2017 (dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property Name | | Type | | Location | | Encumbrances | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | Land | | Building | | | One Freedom Square | | Office | | Reston, VA | | — |
| | 9,929 |
| | 84,504 |
| | 32,618 |
| | 11,293 |
| | 115,758 |
| | — |
| | — |
| | 127,051 |
| | 50,313 |
| | 2000 | | 2003 | | (1) | Capital Gallery | | Office | | Washington, DC | | — |
| | 4,725 |
| | 29,565 |
| | 89,514 |
| | 8,662 |
| | 115,142 |
| | — |
| | — |
| | 123,804 |
| | 66,009 |
| | 1981/2006 | | 2007 | | (1) | Weston Corporate Center | | Office | | Weston, MA | | — |
| | 25,753 |
| | 92,312 |
| | (123 | ) | | 25,854 |
| | 92,088 |
| | — |
| | — |
| | 117,942 |
| | 23,125 |
| | 2010 | | 2001 | | (1) | Two Freedom Square | | Office | | Reston, VA | | — |
| | 13,930 |
| | 77,739 |
| | 23,379 |
| | 15,420 |
| | 99,628 |
| | — |
| | — |
| | 115,048 |
| | 47,936 |
| | 2001 | | 2003 | | (1) | One and Two Reston Overlook | | Office | | Reston, VA | | — |
| | 16,456 |
| | 66,192 |
| | 25,111 |
| | 16,179 |
| | 91,580 |
| | — |
| | — |
| | 107,759 |
| | 44,626 |
| | 1999 | | 2000 | | (1) | Discovery Square | | Office | | Reston, VA | | — |
| | 11,198 |
| | 71,782 |
| | 24,414 |
| | 12,533 |
| | 94,861 |
| | — |
| | — |
| | 107,394 |
| | 43,184 |
| | 2001 | | 2003 | | (1) | 140 Kendrick Street | | Office | | Needham, MA | | — |
| | 18,095 |
| | 66,905 |
| | 17,492 |
| | 19,092 |
| | 83,400 |
| | — |
| | — |
| | 102,492 |
| | 29,013 |
| | 2000 | | 2004 | | (1) | 355 Main Street | | Office | | Cambridge, MA | | — |
| | 18,863 |
| | 53,346 |
| | 27,450 |
| | 21,173 |
| | 78,486 |
| | — |
| | — |
| | 99,659 |
| | 26,915 |
| | 1981/1996/2013 | | 2006 | | (1) | 10 CityPoint | | Office | | Waltham, MA | | — |
| | 1,953 |
| | 85,752 |
| | 2,833 |
| | 2,116 |
| | 88,422 |
| | — |
| | — |
| | 90,538 |
| | 4,673 |
| | 2016 | | 1997 | | (1) | 90 Broadway | | Office | | Cambridge, MA | | — |
| | 19,104 |
| | 52,078 |
| | 17,180 |
| | 20,785 |
| | 67,577 |
| | — |
| | — |
| | 88,362 |
| | 19,254 |
| | 1983/1998/2013 | | 2006 | | (1) | 230 CityPoint | | Office | | Waltham, MA | | — |
| | 13,189 |
| | 49,823 |
| | 25,236 |
| | 13,593 |
| | 74,655 |
| | — |
| | — |
| | 88,248 |
| | 26,562 |
| | 1992 | | 2005 | | (1) | Waltham Weston Corporate Center | | Office | | Waltham, MA | | — |
| | 10,385 |
| | 60,694 |
| | 11,030 |
| | 11,097 |
| | 71,012 |
| | — |
| | — |
| | 82,109 |
| | 30,036 |
| | 2003 | | 1999 | | (1) | 77 CityPoint | | Office | | Waltham, MA | | — |
| | 13,847 |
| | 60,383 |
| | 5,703 |
| | 13,873 |
| | 66,060 |
| | — |
| | — |
| | 79,933 |
| | 23,044 |
| | 2008 | | 2001 | | (1) | 3625-3635 Peterson Way | | Office | | Santa Clara, CA | | — |
| | 63,206 |
| | 14,879 |
| | 138 |
| | 63,206 |
| | 14,879 |
| | 138 |
| | — |
| | 78,223 |
| | 5,120 |
| | 1979 | | 2016 | | (1) | North First Business Park | | Office | | San Jose, CA | | — |
| | 58,402 |
| | 13,069 |
| | 4,416 |
| | 23,377 |
| | 16,600 |
| | 35,910 |
| | — |
| | 75,887 |
| | 15,839 |
| | 1981 | | 2007 | | (1) | 300 Binney Street | | Office | | Cambridge, MA | | — |
| | 18,080 |
| | 51,262 |
| | 140 |
| | 18,080 |
| | 51,402 |
| | — |
| | — |
| | 69,482 |
| | 7,755 |
| | 2013 | | 2009 | | (1) | 2440 West El Camino Real | | Office | | Mountain View, CA | | — |
| | 16,741 |
| | 51,285 |
| | 1,287 |
| | 16,741 |
| | 52,572 |
| | — |
| | — |
| | 69,313 |
| | 10,790 |
| | 1987/2003 | | 2011 | | (1) | Wisconsin Place | | Office | | Chevy Chase, MD | | — |
| | — |
| | 53,349 |
| | 14,907 |
| | — |
| | 68,256 |
| | — |
| | — |
| | 68,256 |
| | 19,775 |
| | 2009 | | 2004 | | (1) | Reston Corporate Center | | Office | | Reston, VA | | — |
| | 9,135 |
| | 50,857 |
| | 6,236 |
| | 10,148 |
| | 56,080 |
| | — |
| | — |
| | 66,228 |
| | 26,769 |
| | 1984 | | 1998 | | (1) | New Dominion Technology Park, Bldg. Two | | Office | | Herndon, VA | | — |
| | 5,584 |
| | 51,868 |
| | 4,157 |
| | 6,510 |
| | 55,099 |
| | — |
| | — |
| | 61,609 |
| | 23,652 |
| | 2004 | | 1998 | | (1) | 200 West Street | | Office | | Waltham, MA | | — |
| | 16,148 |
| | 24,983 |
| | 10,673 |
| | 16,813 |
| | 34,991 |
| | — |
| | — |
| | 51,804 |
| | 21,140 |
| | 1999 | | 1997 | | (1) | New Dominion Technology Park, Bldg. One | | Office | | Herndon, VA | | 32,691 |
| | 3,880 |
| | 43,227 |
| | 3,882 |
| | 4,583 |
| | 46,406 |
| | — |
| | — |
| | 50,989 |
| | 25,940 |
| | 2001 | | 1998 | | (1) | Sumner Square | | Office | | Washington, DC | | — |
| | 624 |
| | 28,745 |
| | 19,000 |
| | 1,478 |
| | 46,891 |
| | — |
| | — |
| | 48,369 |
| | 23,570 |
| | 1985 | | 1999 | | (1) | 255 Main Street | | Office | | Cambridge, MA | | — |
| | 134 |
| | 25,110 |
| | 21,583 |
| | 548 |
| | 46,279 |
| | — |
| | — |
| | 46,827 |
| | 28,250 |
| | 1987 | | 1997 | | (1) | University Place | | Office | | Cambridge, MA | | 7,407 |
| | — |
| | 37,091 |
| | 9,007 |
| | 390 |
| | 45,708 |
| | — |
| | — |
| | 46,098 |
| | 26,295 |
| | 1985 | | 1998 | | (1) | 2600 Tower Oaks Boulevard | | Office | | Rockville, MD | | — |
| | 4,243 |
| | 31,125 |
| | 9,867 |
| | 4,785 |
| | 40,450 |
| | — |
| | — |
| | 45,235 |
| | 21,020 |
| | 2001 | | 1998 | | (1) | Quorum Office Park | | Office | | Chelmsford, MA | | — |
| | 3,750 |
| | 32,454 |
| | 5,813 |
| | 5,187 |
| | 36,830 |
| | — |
| | — |
| | 42,017 |
| | 16,594 |
| | 2001 | | 2000 | | (1) | 500 E Street | | Office | | Washington, DC | | — |
| | 109 |
| | 22,420 |
| | 14,743 |
| | 2,379 |
| | 34,893 |
| | — |
| | — |
| | 37,272 |
| | 23,781 |
| | 1987 | | 1997 | | (1) | 150 Broadway | | Office | | Cambridge, MA | | — |
| | 850 |
| | 25,042 |
| | 8,540 |
| | 1,323 |
| | 33,109 |
| | — |
| | — |
| | 34,432 |
| | 16,933 |
| | 1999 | | 1997 | | (1) | 325 Main Street | | Office | | Cambridge, MA | | — |
| | 174 |
| | 12,200 |
| | 11,963 |
| | 965 |
| | 23,372 |
| | — |
| | — |
| | 24,337 |
| | 12,852 |
| | 1987/2013 | | 1997 | | (1) | 105 Broadway | | Office | | Cambridge, MA | | — |
| | 1,299 |
| | 12,943 |
| | 8,214 |
| | 2,395 |
| | 20,061 |
| | — |
| | — |
| | 22,456 |
| | 13,493 |
| | 1990 | | 1997 | | (1) | Lexington Office Park | | Office | | Lexington, MA | | — |
| | 998 |
| | 1,426 |
| | 18,219 |
| | 1,264 |
| | 19,379 |
| | — |
| | — |
| | 20,643 |
| | 13,404 |
| | 1982 | | 1997 | | (1) | 201 Spring Street | | Office | | Lexington, MA | | — |
| | 2,849 |
| | 15,303 |
| | 694 |
| | 3,124 |
| | 15,722 |
| | — |
| | — |
| | 18,846 |
| | 7,931 |
| | 1997 | | 1997 | | (1) | The Point | | Office | | Waltham, MA | | — |
| | 6,395 |
| | 10,040 |
| | 409 |
| | 6,480 |
| | 10,364 |
| | — |
| | — |
| | 16,844 |
| | 714 |
| | 2015 | | 2007 | | (1) | 92-100 Hayden Avenue | | Office | | Lexington, MA | | — |
| | 594 |
| | 6,748 |
| | 8,181 |
| | 802 |
| | 14,721 |
| | — |
| | — |
| | 15,523 |
| | 12,495 |
| | 1985 | | 1997 | | (1) | 91 Hartwell Avenue | | Office | | Lexington, MA | | — |
| | 784 |
| | 6,464 |
| | 8,269 |
| | 941 |
| | 14,576 |
| | — |
| | — |
| | 15,517 |
| | 9,849 |
| | 1985 | | 1997 | | (1) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston Properties, Inc. Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | Property Name | | Type | | Location | | Encumbrances | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | Land | | Building | | | 7501 Boston Boulevard, Building Seven | | Office | | Springfield, VA | | — | | | 665 | | | 9,273 | | | 819 | | | 791 | | | 9,966 | | | — | | | — | | | 10,757 | | | 5,665 | | | 1997 | | 1997 | | (1) | 7435 Boston Boulevard, Building One | | Office | | Springfield, VA | | — | | | 392 | | | 3,822 | | | 5,016 | | | 659 | | | 8,571 | | | — | | | — | | | 9,230 | | | 6,756 | | | 1982 | | 1997 | | (1) | 32 Hartwell Avenue | | Office | | Lexington, MA | | — | | | 168 | | | 1,943 | | | 6,944 | | | 314 | | | 8,741 | | | — | | | — | | | 9,055 | | | 2,365 | | | 1968/1979/1987 | | 1997 | | (1) | 7450 Boston Boulevard, Building Three | | Office | | Springfield, VA | | — | | | 1,165 | | | 4,681 | | | 2,591 | | | 1,430 | | | 7,007 | | | — | | | — | | | 8,437 | | | 4,103 | | | 1987 | | 1998 | | (1) | 250 Binney Street | | Office | | Cambridge, MA | | — | | | 110 | | | 4,483 | | | 3,593 | | | 273 | | | 7,913 | | | — | | | — | | | 8,186 | | | 6,211 | | | 1983 | | 1997 | | (1) | 8000 Grainger Court, Building Five | | Office | | Springfield, VA | | — | | | 366 | | | 4,282 | | | 3,198 | | | 601 | | | 7,245 | | | — | | | — | | | 7,846 | | | 5,923 | | | 1984 | | 1997 | | (1) | 453 Ravendale Drive | | Office | | Mountain View, CA | | — | | | 5,477 | | | 1,090 | | | 676 | | | 5,477 | | | 1,766 | | | — | | | — | | | 7,243 | | | 819 | | | 1977 | | 2012 | | (1) | 7300 Boston Boulevard, Building Thirteen | | Office | | Springfield, VA | | — | | | 608 | | | 4,773 | | | 1,075 | | | 661 | | | 5,795 | | | — | | | — | | | 6,456 | | | 2,269 | | | 2002 | | 1997 | | (1) | 17 Hartwell Avenue | | Office | | Lexington, MA | | — | | | 26 | | | 150 | | | 6,064 | | | 65 | | | 6,175 | | | — | | | — | | | 6,240 | | | 2,487 | | | 1968 | | 1997 | | (1) | 7601 Boston Boulevard, Building Eight | | Office | | Springfield, VA | | — | | | 200 | | | 878 | | | 5,035 | | | 551 | | | 5,562 | | | — | | | — | | | 6,113 | | | 4,838 | | | 1986 | | 1997 | | (1) | 7500 Boston Boulevard, Building Six | | Office | | Springfield, VA | | — | | | 138 | | | 3,749 | | | 1,640 | | | 367 | | | 5,160 | | | — | | | — | | | 5,527 | | | 4,399 | | | 1985 | | 1997 | | (1) | 8000 Corporate Court, Building Eleven | | Office | | Springfield, VA | | — | | | 136 | | | 3,071 | | | 1,649 | | | 774 | | | 4,082 | | | — | | | — | | | 4,856 | | | 3,320 | | | 1989 | | 1997 | | (1) | 7375 Boston Boulevard, Building Ten | | Office | | Springfield, VA | | — | | | 23 | | | 2,685 | | | 1,035 | | | 93 | | | 3,650 | | | — | | | — | | | 3,743 | | | 2,724 | | | 1988 | | 1997 | | (1) | 7374 Boston Boulevard, Building Four | | Office | | Springfield, VA | | — | | | 241 | | | 1,605 | | | 1,821 | | | 398 | | | 3,269 | | | — | | | — | | | 3,667 | | | 2,870 | | | 1984 | | 1997 | | (1) | 7451 Boston Boulevard, Building Two | | Office | | Springfield, VA | | — | | | 249 | | | 1,542 | | | 1,658 | | | 613 | | | 2,836 | | | — | | | — | | | 3,449 | | | 2,699 | | | 1982 | | 1997 | | (1) | The Skylyne | | Residential | | Oakland, CA | | — | | | 28,962 | | | 239,077 | | | 0 | | | 28,962 | | | 239,077 | | | — | | | — | | | 268,039 | | | 2,128 | | | 2020 | | N/A | | (1) | Signature at Reston | | Residential | | Reston, VA | | — | | | 27,076 | | | 190,580 | | | 659 | | | 27,076 | | | 191,239 | | | — | | | — | | | 218,315 | | | 13,650 | | | 2018 | | 2013 | | (1) | Proto Kendall Square | | Residential | | Cambridge, MA | | — | | | 9,243 | | | 127,248 | | | 3,336 | | | 9,245 | | | 130,582 | | | — | | | — | | | 139,827 | | | 7,883 | | | 2018 | | 2015 | | (1) | The Avant at Reston Town Center | | Residential | | Reston, VA | | — | | | 20,350 | | | 91,995 | | | 846 | | | 20,350 | | | 92,841 | | | — | | | — | | | 113,191 | | | 17,204 | | | 2014 | | 2010 | | (1) | The Lofts at Atlantic Wharf | | Residential | | Boston, MA | | — | | | 3,529 | | | 54,891 | | | 2,129 | | | 3,529 | | | 57,020 | | | — | | | — | | | 60,549 | | | 14,166 | | | 2011 | | 2007 | | (1) | Boston Marriott Cambridge | | Hotel | | Cambridge, MA | | — | | | 478 | | | 37,918 | | | 35,486 | | | 1,201 | | | 72,681 | | | — | | | — | | | 73,882 | | | 49,103 | | | 1986/2017 | | 1997 | | (1) | Kendall Center Green Garage | | Garage | | Cambridge, MA | | — | | | 0 | | | 35,035 | | | 6,846 | | | 103 | | | 41,778 | | | — | | | — | | | 41,881 | | | 14,442 | | | 1984 | | 2006 | | (1) | Kendall Center Yellow Garage | | Garage | | Cambridge, MA | | — | | | 1,256 | | | 15,697 | | | 1,552 | | | 1,434 | | | 17,071 | | | — | | | — | | | 18,505 | | | 6,485 | | | 2006 | | 2004 | | (1) | Kendall Center Blue Garage | | Garage | | Cambridge, MA | | — | | | 1,163 | | | 11,633 | | | 2,111 | | | 1,579 | | | 13,328 | | | — | | | — | | | 14,907 | | | 10,044 | | | 1990 | | 1997 | | (1) | Reston Next (formerly Reston Gateway) | | Development | | Reston, VA | | — | | | 0 | | | 0 | | | 354,174 | | | 0 | | | 0 | | | — | | | 354,174 | | | 354,174 | | | 0 | | | N/A | | 1998 | | N/A | 2100 Pennsylvania Avenue | | Development | | Washington, DC | | — | | | 0 | | | 0 | | | 294,445 | | | 185,129 | | | 0 | | | — | | | 109,316 | | | 294,445 | | | 3,481 | | | N/A | | N/A | | N/A | 325 Main Street | | Development | | Cambridge, MA | | — | | | 174 | | | 0 | | | 161,468 | | | 965 | | | 0 | | | — | | | 160,677 | | | 161,642 | | | 0 | | | N/A | | 1997 | | N/A | 777 Harrison Street (formerly 425 Fourth Street) | | Land | | San Francisco, CA | | — | | | 144,647 | | | 0 | | | 25,930 | | | 0 | | | 47 | | | 170,530 | | | — | | | 170,577 | | | 0 | | | N/A | | 2020 | | N/A | North First Master Plan | | Land | | San Jose, CA | | — | | | 35,004 | | | 0 | | | 3,937 | | | 0 | | | 0 | | | 38,941 | | | — | | | 38,941 | | | 0 | | | N/A | | 2007 | | N/A |
Boston Properties, Inc. Schedule III - Real Estate and Accumulated Depreciation December 31, 2017 (dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property Name | | Type | | Location | | Encumbrances | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | Land | | Building | | | 690 Folsom Street | | Office | | San Francisco, CA | | — |
| | 3,219 |
| | 11,038 |
| | 1,157 |
| | 3,219 |
| | 12,195 |
| | — |
| | — |
| | 15,414 |
| | 1,295 |
| | 2015 | | 2012 | | (1) | 181 Spring Street | | Office | | Lexington, MA | | — |
| | 1,066 |
| | 9,520 |
| | 2,318 |
| | 1,160 |
| | 11,744 |
| | — |
| | — |
| | 12,904 |
| | 5,194 |
| | 1999 | | 1997 | | (1) | 195 West Street | | Office | | Waltham, MA | | — |
| | 1,611 |
| | 6,652 |
| | 4,340 |
| | 1,858 |
| | 10,745 |
| | — |
| | — |
| | 12,603 |
| | 7,963 |
| | 1990 | | 1997 | | (1) | 33 Hayden Avenue | | Office | | Lexington, MA | | — |
| | 266 |
| | 3,234 |
| | 8,381 |
| | 425 |
| | 11,456 |
| | — |
| | — |
| | 11,881 |
| | 8,211 |
| | 1979 | | 1997 | | (1) | 7501 Boston Boulevard, Building Seven | | Office | | Springfield, VA | | — |
| | 665 |
| | 9,273 |
| | 819 |
| | 791 |
| | 9,966 |
| | — |
| | — |
| | 10,757 |
| | 4,848 |
| | 1997 | | 1997 | | (1) | 7435 Boston Boulevard, Building One | | Office | | Springfield, VA | | — |
| | 392 |
| | 3,822 |
| | 3,997 |
| | 659 |
| | 7,552 |
| | — |
| | — |
| | 8,211 |
| | 5,510 |
| | 1982 | | 1997 | | (1) | 250 Binney Street | | Office | | Cambridge, MA | | — |
| | 110 |
| | 4,483 |
| | 3,593 |
| | 273 |
| | 7,913 |
| | — |
| | — |
| | 8,186 |
| | 5,066 |
| | 1983 | | 1997 | | (1) | 8000 Grainger Court, Building Five | | Office | | Springfield, VA | | — |
| | 366 |
| | 4,282 |
| | 3,375 |
| | 601 |
| | 7,422 |
| | — |
| | — |
| | 8,023 |
| | 5,644 |
| | 1984 | | 1997 | | (1) | 7450 Boston Boulevard, Building Three | | Office | | Springfield, VA | | — |
| | 1,165 |
| | 4,681 |
| | 1,773 |
| | 1,430 |
| | 6,189 |
| | — |
| | — |
| | 7,619 |
| | 3,451 |
| | 1987 | | 1998 | | (1) | 453 Ravendale Drive | | Office | | Mountain View, CA | | — |
| | 5,477 |
| | 1,090 |
| | 408 |
| | 5,477 |
| | 1,498 |
| | — |
| | — |
| | 6,975 |
| | 472 |
| | 1977 | | 2012 | | (1) | 17 Hartwell Avenue | | Office | | Lexington, MA | | — |
| | 26 |
| | 150 |
| | 6,252 |
| | 65 |
| | 6,363 |
| | — |
| | — |
| | 6,428 |
| | 1,098 |
| | 1968 | | 1997 | | (1) | 7601 Boston Boulevard, Building Eight | | Office | | Springfield, VA | | — |
| | 200 |
| | 878 |
| | 5,052 |
| | 551 |
| | 5,579 |
| | — |
| | — |
| | 6,130 |
| | 4,263 |
| | 1986 | | 1997 | | (1) | 7300 Boston Boulevard, Building Thirteen | | Office | | Springfield, VA | | — |
| | 608 |
| | 4,773 |
| | 709 |
| | 661 |
| | 5,429 |
| | — |
| | — |
| | 6,090 |
| | 2,785 |
| | 2002 | | 1997 | | (1) | 7500 Boston Boulevard, Building Six | | Office | | Springfield, VA | | — |
| | 138 |
| | 3,749 |
| | 1,655 |
| | 406 |
| | 5,136 |
| | — |
| | — |
| | 5,542 |
| | 3,965 |
| | 1985 | | 1997 | | (1) | 8000 Corporate Court, Building Eleven | | Office | | Springfield, VA | | — |
| | 136 |
| | 3,071 |
| | 1,596 |
| | 774 |
| | 4,029 |
| | — |
| | — |
| | 4,803 |
| | 2,909 |
| | 1989 | | 1997 | | (1) | 7374 Boston Boulevard, Building Four | | Office | | Springfield, VA | | — |
| | 241 |
| | 1,605 |
| | 1,913 |
| | 398 |
| | 3,361 |
| | — |
| | — |
| | 3,759 |
| | 2,578 |
| | 1984 | | 1997 | | (1) | 7375 Boston Boulevard, Building Ten | | Office | | Springfield, VA | | — |
| | 23 |
| | 2,685 |
| | 938 |
| | 93 |
| | 3,553 |
| | — |
| | — |
| | 3,646 |
| | 2,570 |
| | 1988 | | 1997 | | (1) | 7451 Boston Boulevard, Building Two | | Office | | Springfield, VA | | — |
| | 249 |
| | 1,542 |
| | 1,659 |
| | 613 |
| | 2,837 |
| | — |
| | — |
| | 3,450 |
| | 2,429 |
| | 1982 | | 1997 | | (1) | 32 Hartwell Avenue | | Office | | Lexington, MA | | — |
| | 168 |
| | 1,943 |
| | 1,012 |
| | 314 |
| | 2,809 |
| | — |
| | — |
| | 3,123 |
| | 1,974 |
| | 1968/1979/1987 | | 1997 | | (1) | 164 Lexington Road | | Office | | Billerica, MA | | — |
| | 592 |
| | 1,370 |
| | 319 |
| | 643 |
| | 1,638 |
| | — |
| | — |
| | 2,281 |
| | 868 |
| | 1982 | | 1997 | | (1) | The Avant at Reston Town Center | | Residential | | Reston, VA | | — |
| | 20,350 |
| | 91,995 |
| | 830 |
| | 20,350 |
| | 92,825 |
| | — |
| | — |
| | 113,175 |
| | 9,780 |
| | 2014 | | 2010 | | (1) | The Lofts at Atlantic Wharf | | Residential | | Boston, MA | | — |
| | 3,529 |
| | 54,891 |
| | 1,768 |
| | 3,529 |
| | 56,659 |
| | — |
| | — |
| | 60,188 |
| | 9,622 |
| | 2011 | | 2007 | | (1) | Boston Marriott Cambridge | | Hotel | | Cambridge, MA | | — |
| | 478 |
| | 37,918 |
| | 38,799 |
| | 1,201 |
| | 75,994 |
| | — |
| | — |
| | 77,195 |
| | 47,753 |
| | 1986 | | 1997 | | (1) | Kendall Center Green Garage | | Garage | | Cambridge, MA | | — |
| | — |
| | 35,035 |
| | 7,448 |
| | 103 |
| | 42,380 |
| | — |
| | — |
| | 42,483 |
| | 10,779 |
| | 1984 | | 2006 | | (1) | Kendall Center Yellow Garage | | Garage | | Cambridge, MA | | — |
| | 1,256 |
| | 15,697 |
| | 1,621 |
| | 1,434 |
| | 17,140 |
| | — |
| | — |
| | 18,574 |
| | 5,181 |
| | 2006 | | 2004 | | (1) | Kendall Center Blue Garage | | Garage | | Cambridge, MA | | — |
| | 1,163 |
| | 11,633 |
| | 2,283 |
| | 1,579 |
| | 13,500 |
| | — |
| | — |
| | 15,079 |
| | 9,209 |
| | 1990 | | 1997 | | (1) | Salesforce Tower | | Development | | San Francisco, CA | | — |
| | — |
| | — |
| | 947,106 |
| | 200,349 |
| | 55,318 |
| | — |
| | 691,439 |
| | 947,106 |
| | 116 |
| | N/A | | 2013 | | N/A | Signature at Reston | | Development | | Reston, VA | | — |
| | — |
| | — |
| | 203,650 |
| | — |
| | — |
| | — |
| | 203,650 |
| | 203,650 |
| | — |
| | N/A | | 2013 | | N/A | Proto Kendall Square | | Development | | Cambridge, MA | | — |
| | — |
| | — |
| | 82,905 |
| | — |
| | — |
| | — |
| | 82,905 |
| | 82,905 |
| | — |
| | N/A | | 2015 | | N/A | 145 Broadway | | Development | | Cambridge, MA | | — |
| | 121 |
| | — |
| | 79,979 |
| | 324 |
| | — |
| | — |
| | 79,776 |
| | 80,100 |
| | — |
| | NA | | 1997 | | N/A | 191 Spring Street | | Development | | Lexington, MA | | — |
| | 2,850 |
| | 27,166 |
| | 35,174 |
| | 3,151 |
| | 46,288 |
| | — |
| | 15,751 |
| | 65,190 |
| | 19,034 |
| | 1971/1995 | | 1997 | | (1) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston Properties, Inc. Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | Property Name | | Type | | Location | | Encumbrances | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | Land | | Building | | | Plaza at Almaden | | Land | | San Jose, CA | | — | | | 0 | | | 0 | | | 36,431 | | | 0 | | | 0 | | | 36,431 | | | — | | | 36,431 | | | 0 | | | N/A | | 2006 | | N/A | Back Bay Station Master Plan | | Land | | Boston, MA | | — | | | 0 | | | 0 | | | 30,643 | | | 0 | | | 0 | | | 30,643 | | | — | | | 30,643 | | | 0 | | | N/A | | N/A | | N/A | Reston Gateway Master Plan | | Land | | Reston, VA | | — | | | 0 | | | 0 | | | 28,610 | | | 0 | | | 0 | | | 28,610 | | | — | | | 28,610 | | | 0 | | | N/A | | 1998 | | N/A | Springfield Metro Center | | Land | | Springfield, VA | | — | | | 0 | | | 0 | | | 19,871 | | | 0 | | | 0 | | | 19,871 | | | — | | | 19,871 | | | 0 | | | N/A | | 2007 | | N/A | 214 Third Avenue | | Land | | Waltham, MA | | — | | | 0 | | | 0 | | | 19,206 | | | 0 | | | 0 | | | 19,206 | | | — | | | 19,206 | | | 0 | | | N/A | | 2006 | | N/A | CityPoint South Master Plan | | Land | | Waltham, MA | | — | | | 0 | | | 0 | | | 13,363 | | | 0 | | | 0 | | | 13,363 | | | — | | | 13,363 | | | 0 | | | N/A | | N/A | | N/A | 103 Fourth Avenue | | Land | | Waltham, MA | | — | | | 0 | | | 0 | | | 12,888 | | | 0 | | | 0 | | | 12,888 | | | — | | | 12,888 | | | 0 | | | N/A | | 2007 | | N/A | Broad Run Business Park | | Land | | Loudoun County, VA | | — | | | 0 | | | 0 | | | 2,392 | | | 0 | | | 0 | | | 2,392 | | | — | | | 2,392 | | | 0 | | | N/A | | 1998 | | N/A | Kendall Center Master Plan | | Land | | Cambridge, MA | | — | | | 0 | | | 0 | | | 2,145 | | | 0 | | | 0 | | | 2,145 | | | — | | | 2,145 | | | 0 | | | N/A | | 1997 | | N/A | Weston Quarry | | Land | | Weston, MA | | — | | | 0 | | | 0 | | | 1,249 | | | 0 | | | 0 | | | 1,249 | | | — | | | 1,249 | | | 0 | | | N/A | | 2001 | | N/A | Reston Overlook Master Plan | | Land | | Reston, VA | | — | | | 0 | | | 0 | | | 42 | | | 0 | | | 0 | | | 42 | | | — | | | 42 | | | 0 | | | N/A | | 2000 | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,909,081 | | (2) | | $ | 5,160,116 | | | $ | 13,196,160 | | | $ | 4,947,027 | | | $ | 5,429,703 | | (3) | | $ | 16,553,873 | | (4) | | $ | 450,954 | | (5) | | $ | 868,773 | | | $ | 23,303,303 | | | $ | 5,501,637 | | | | | | | |
Boston Properties, Inc. Schedule III - Real Estate and Accumulated Depreciation December 31, 2017 (dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property Name | | Type | | Location | | Encumbrances | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | Land | | Building | | | 6595 Springfield Center Drive (TSA Headquarters) | | Development | | Springfield, VA | | — |
| | — |
| | — |
| | 41,918 |
| | — |
| | — |
| | — |
| | 41,918 |
| | 41,918 |
| | — |
| | N/A | | 2007 | | N/A | MacArthur Station Residences | | Development | | Oakland, CA | | — |
| | — |
| | — |
| | 37,644 |
| | — |
| | — |
| | — |
| | 37,644 |
| | 37,644 |
| | — |
| | N/A | | N/A | | N/A | 20 CityPoint | | Development | | Waltham, MA | | — |
| | — |
| | — |
| | 13,056 |
| | — |
| | — |
| | — |
| | 13,056 |
| | 13,056 |
| | — |
| | N/A | | 2007 | | N/A | Tower Oaks Master Plan | | Land | | Rockville, MD | | — |
| | — |
| | — |
| | 29,419 |
| | — |
| | — |
| | 29,419 |
| | — |
| | 29,419 |
| | — |
| | N/A | | 1998 | | N/A | Plaza at Almaden | | Land | | San Jose, CA | | — |
| | — |
| | — |
| | 29,085 |
| | — |
| | — |
| | 29,085 |
| | — |
| | 29,085 |
| | — |
| | N/A | | 2006 | | N/A | Springfield Metro Center | | Land | | Springfield, VA | | — |
| | — |
| | — |
| | 19,684 |
| | — |
| | — |
| | 19,684 |
| | — |
| | 19,684 |
| | — |
| | N/A | | 2007 | | N/A | 214 Third Avenue | | Land | | Waltham, MA | | — |
| | — |
| | — |
| | 13,815 |
| | — |
| | — |
| | 13,815 |
| | — |
| | 13,815 |
| | — |
| | N/A | | 2006 | | N/A | Reston Gateway | | Land | | Reston, VA | | — |
| | — |
| | — |
| | 13,730 |
| | — |
| | — |
| | 13,730 |
| | — |
| | 13,730 |
| | — |
| | N/A | | 1998 | | N/A | 103 Fourth Avenue | | Land | | Waltham, MA | | — |
| | — |
| | — |
| | 12,115 |
| | — |
| | — |
| | 12,115 |
| | — |
| | 12,115 |
| | — |
| | N/A | | 2007 | | N/A | Crane Meadow | | Land | | Marlborough, MA | | — |
| | — |
| | — |
| | 8,836 |
| | — |
| | — |
| | 8,836 |
| | — |
| | 8,836 |
| | — |
| | N/A | | 2000 | | N/A | Washingtonian North | | Land | | Gaithersburg, MD | | — |
| | — |
| | — |
| | 7,645 |
| | — |
| | — |
| | 7,645 |
| | — |
| | 7,645 |
| | — |
| | N/A | | 1998 | | N/A | 2100 Pennsylvania Avenue | | Land | | Washington, DC | | — |
| | — |
| | — |
| | 6,543 |
| | — |
| | — |
| | 6,543 |
| | — |
| | 6,543 |
| | — |
| | N/A | | N/A | | N/A | Fourth and Harrison | | Land | | San Francisco, CA | | — |
| | — |
| | — |
| | 5,659 |
| | — |
| | — |
| | 5,659 |
| | — |
| | 5,659 |
| | — |
| | N/A | | N/A | | N/A | North First Master Plan | | Land | | San Jose, CA | | — |
| | — |
| | — |
| | 3,018 |
| | — |
| | — |
| | 3,018 |
| | — |
| | 3,018 |
| | — |
| | N/A | | 2007 | | N/A | Broad Run Business Park | | Land | | Loudoun County, VA | | — |
| | — |
| | — |
| | 2,367 |
| | — |
| | — |
| | 2,367 |
| | — |
| | 2,367 |
| | — |
| | N/A | | 1998 | | N/A | Kendall Center Master Plan | | Land | | Cambridge, MA | | — |
| | — |
| | — |
| | 2,207 |
| | — |
| | — |
| | 2,207 |
| | — |
| | 2,207 |
| | — |
| | N/A | | N/A | | N/A | Weston Quarry | | Land | | Weston, MA | | — |
| | — |
| | — |
| | 1,194 |
| | — |
| | — |
| | 1,194 |
| | — |
| | 1,194 |
| | — |
| | N/A | | 2001 | | N/A | Reston Overlook Master Plan | | Land | | Reston, VA | | — |
| | — |
| | — |
| | 39 |
| | — |
| | — |
| | 39 |
| | — |
| | 39 |
| | — |
| | N/A | | 2000 | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,979,281 |
| (2 | ) | $ | 4,762,002 |
| | $ | 11,634,050 |
| | $ | 4,662,662 |
| | $ | 5,080,679 |
| | $ | 14,503,772 |
| | $ | 204,925 |
| (3 | ) | $ | 1,269,338 |
| | $ | 21,058,714 |
| | $ | 4,566,570 |
| | | | | | |
Note: Total Real Estate does not include Furniture, Fixtures and Equipment totaling approximately $37,928.$49,606. Accumulated Depreciation does not include approximately $23,064$32,465 of accumulated depreciation related to Furniture, Fixtures and Equipment. The aggregate cost and accumulated depreciation for tax purposes was approximately $17.3$20.7 billion and $3.6$4.5 billion, respectively. | | (1) | Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to 40 years. |
| | (2) | Includes unamortized deferred financing costs totaling approximately $(34.7) million. |
| | (3) | Includes pre-development costs. |
(1)Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to 40 years.
(2)Includes unamortized deferred financing costs totaling approximately $(22.9) million.
(3)Includes Right of Use Assets - Finance Leases and Right of Use Assets - Operating Leases of approximately $214,091 and $146,406, respectively.
(4)Includes Right of Use Assets - Finance Leases of approximately $23,302.
(5)Includes pre-development costs.
Boston Properties, Inc. Real Estate and Accumulated Depreciation December 31, 2017, 20162020, 2019 and 20152018 (dollars in thousands)
A summary of activity for real estate and accumulated depreciation is as follows: | | | | 2017 | | 2016 | | 2015 | | 2020 | | 2019 | | 2018 | Real Estate: | | | | | | | Real Estate: | | | | | | | Balance at the beginning of the year | | $ | 20,114,576 |
| | $ | 19,451,683 |
| | $ | 19,208,417 |
| Balance at the beginning of the year | | $ | 22,844,697 | | | $ | 21,605,545 | | | $ | 21,058,714 | | Additions to/improvements of real estate | | 1,099,286 |
| | 977,287 |
| | 700,792 |
| Additions to/improvements of real estate | | 996,989 | | | 1,671,898 | | | 1,043,379 | | Assets sold/written-off | | (155,148 | ) | | (314,394 | ) | | $ | (457,526 | ) | Assets sold/written-off | | (538,383) | | | (432,746) | | | (496,548) | | Balance at the end of the year | | $ | 21,058,714 |
| | $ | 20,114,576 |
| | $ | 19,451,683 |
| Balance at the end of the year | | $ | 23,303,303 | | | $ | 22,844,697 | | | $ | 21,605,545 | | Accumulated Depreciation: | | | | | | | Accumulated Depreciation: | | | | | | | Balance at the beginning of the year | | $ | 4,201,891 |
| | $ | 3,905,940 |
| | $ | 3,529,978 |
| Balance at the beginning of the year | | $ | 5,239,179 | | | $ | 4,871,102 | | | $ | 4,566,570 | | Depreciation expense | | 497,059 |
| | 560,024 |
| | 486,450 |
| Depreciation expense | | 573,898 | | | 564,938 | | | 533,342 | | Assets sold/written-off | | (132,380 | ) | | (264,073 | ) | | (110,488 | ) | Assets sold/written-off | | (311,440) | | | (196,861) | | | (228,810) | | Balance at the end of the year | | $ | 4,566,570 |
| | $ | 4,201,891 |
| | $ | 3,905,940 |
| Balance at the end of the year | | $ | 5,501,637 | | | $ | 5,239,179 | | | $ | 4,871,102 | |
Note: Real Estate and Accumulated Depreciation amounts do not include Furniture, Fixtures and Equipment.
Boston Properties Limited Partnership Schedule III—Real Estate and Accumulated Depreciation December 31, 2017 (dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | Property Name | | Type | | Location | | Encumbrances | | Land | | Building | | 767 Fifth Avenue (the General Motors Building) | | Office | | New York, NY | | $ | 2,267,041 |
| | $ | 1,796,252 |
| | $ | 1,532,654 |
| | $ | 135,559 |
| | $ | 1,796,252 |
| | $ | 1,668,213 |
| | $ | — |
| | $ | — |
| | $ | 3,464,465 |
| | $ | 222,981 |
| | 1968 | | 2013 | | (1) | Prudential Center | | Office | | Boston, MA | | — |
| | 92,077 |
| | 948,357 |
| | 441,339 |
| | 100,540 |
| | 1,381,233 |
| | — |
| | — |
| | 1,481,773 |
| | 497,960 |
| | 1965/1993/2002/2016-2017 | | 1998/1999/2000 | | (1) | Embarcadero Center | | Office | | San Francisco, CA | | — |
| | 179,697 |
| | 847,410 |
| | 304,399 |
| | 180,420 |
| | 1,151,086 |
| | — |
| | — |
| | 1,331,506 |
| | 581,932 |
| | 1970/1989 | | 1998-1999 | | (1) | 399 Park Avenue | | Office | | New York, NY | | — |
| | 339,200 |
| | 700,358 |
| | 121,810 |
| | 339,200 |
| | 822,168 |
| | — |
| | — |
| | 1,161,368 |
| | 296,763 |
| | 1961 | | 2002 | | (1) | 200 Clarendon Street and Garage | | Office | | Boston, MA | | — |
| | 219,543 |
| | 667,884 |
| | 139,189 |
| | 219,616 |
| | 799,991 |
| | 7,009 |
| | — |
| | 1,026,616 |
| | 161,471 |
| | 1976 | | 2010 | | (1) | 601 Lexington Avenue | | Office | | New York, NY | | 672,142 |
| | 241,600 |
| | 494,782 |
| | 253,504 |
| | 279,281 |
| | 607,406 |
| | — |
| | 103,199 |
| | 989,886 |
| | 246,814 |
| | 1977/1997 | | 2001 | | (1) | 250 West 55th Street | | Office | | New York, NY | | — |
| | 285,263 |
| | 603,167 |
| | 43,296 |
| | 285,263 |
| | 646,463 |
| | — |
| | — |
| | 931,726 |
| | 72,058 |
| | 2014 | | 2007 | | (1) | 100 Federal Street | | Office | | Boston, MA | | — |
| | 131,067 |
| | 435,954 |
| | 79,035 |
| | 131,067 |
| | 514,989 |
| | — |
| | — |
| | 646,056 |
| | 97,630 |
| | 1971-1975/2017 | | 2012 | | (1) | Carnegie Center | | Office | | Princeton, NJ | | — |
| | 107,997 |
| | 389,359 |
| | 140,642 |
| | 104,617 |
| | 530,527 |
| | 2,854 |
| | — |
| | 637,998 |
| | 224,256 |
| | 1983-2016 | | 1998/1999/2000/2007/2014/2017 | | (1) | Times Square Tower | | Office | | New York, NY | | — |
| | 165,413 |
| | 380,438 |
| | 49,071 |
| | 159,694 |
| | 435,228 |
| | — |
| | — |
| | 594,922 |
| | 182,850 |
| | 2004 | | 2000 | | (1) | Atlantic Wharf | | Office | | Boston, MA | | — |
| | 63,988 |
| | 454,537 |
| | 17,473 |
| | 63,988 |
| | 472,010 |
| | — |
| | — |
| | 535,998 |
| | 101,525 |
| | 2011 | | 2007 | | (1) | Fountain Square | | Office | | Reston, VA | | — |
| | 56,853 |
| | 306,298 |
| | 17,834 |
| | 56,853 |
| | 320,474 |
| | 3,658 |
| | — |
| | 380,985 |
| | 60,098 |
| | 1986-1990 | | 2012 | | (1) | 510 Madison Avenue | | Office | | New York, NY | | — |
| | 103,000 |
| | 253,665 |
| | 23,875 |
| | 103,000 |
| | 277,540 |
| | — |
| | — |
| | 380,540 |
| | 54,056 |
| | 2012 | | 2010 | | (1) | 599 Lexington Avenue | | Office | | New York, NY | | — |
| | 81,040 |
| | 100,507 |
| | 138,108 |
| | 81,040 |
| | 238,615 |
| | — |
| | — |
| | 319,655 |
| | 159,586 |
| | 1986 | | 1997 | | (1) | 680 Folsom Street | | Office | | San Francisco, CA | | — |
| | 72,545 |
| | 219,766 |
| | 7,545 |
| | 72,545 |
| | 227,311 |
| | — |
| | — |
| | 299,856 |
| | 30,577 |
| | 2014 | | 2012 | | (1) | South of Market and Democracy Tower | | Office | | Reston, VA | | — |
| | 13,603 |
| | 237,479 |
| | 14,655 |
| | 13,603 |
| | 252,134 |
| | — |
| | — |
| | 265,737 |
| | 87,651 |
| | 2008-2009 | | 2003 | | (1) | 601 Massachusetts Avenue | | Office | | Washington, DC | | — |
| | 95,310 |
| | 165,173 |
| | 2,341 |
| | 95,310 |
| | 167,514 |
| | — |
| | — |
| | 262,824 |
| | 12,177 |
| | 2016 | | 2008 | | (1) | Bay Colony Corporate Center | | Office | | Waltham, MA | | — |
| | 18,789 |
| | 148,451 |
| | 73,418 |
| | 18,789 |
| | 221,869 |
| | — |
| | — |
| | 240,658 |
| | 57,320 |
| | 1985-1989 | | 2011 | | (1) | Gateway Center | | Office | | San Francisco, CA | | — |
| | 28,255 |
| | 139,245 |
| | 52,630 |
| | 29,029 |
| | 191,101 |
| | — |
| | — |
| | 220,130 |
| | 101,191 |
| | 1984/1986/2002 | | 1999 | | (1) | 535 Mission Street | | Office | | San Francisco, CA | | — |
| | 40,933 |
| | 148,378 |
| | 3,259 |
| | 40,933 |
| | 151,637 |
| | — |
| | — |
| | 192,570 |
| | 14,637 |
| | 2015 | | 2013 | | (1) | 2200 Pennsylvania Avenue | | Office | | Washington, DC | | — |
| | — |
| | 183,541 |
| | 4,907 |
| | — |
| | 188,448 |
| | — |
| | — |
| | 188,448 |
| | 46,780 |
| | 2011 | | 2008 | | (1) | Mountain View Research Park | | Office | | Mountain View, CA | | — |
| | 95,066 |
| | 68,373 |
| | 8,136 |
| | 95,066 |
| | 76,509 |
| | — |
| | — |
| | 171,575 |
| | 15,146 |
| | 1977-1981/2007-2013 | | 2013 | | (1) | Reservoir Place | | Office | | Waltham, MA | | — |
| | 18,605 |
| | 104,124 |
| | 39,180 |
| | 19,089 |
| | 142,820 |
| | — |
| | — |
| | 161,909 |
| | 65,309 |
| | 1955/1987/2017 | | 1997/1998 | | (1) | 1330 Connecticut Avenue | | Office | | Washington, DC | | — |
| | 25,982 |
| | 82,311 |
| | 28,226 |
| | 25,982 |
| | 110,537 |
| | — |
| | — |
| | 136,519 |
| | 21,484 |
| | 1984 | | 2004 | | (1) | Kingstowne Towne Center | | Office | | Alexandria, VA | | — |
| | 18,021 |
| | 109,038 |
| | 1,207 |
| | 18,021 |
| | 110,245 |
| | — |
| | — |
| | 128,266 |
| | 39,018 |
| | 2003-2006 | | 2007 | | (1) | 1333 New Hampshire Avenue | | Office | | Washington, DC | | — |
| | 34,032 |
| | 85,660 |
| | 6,079 |
| | 34,032 |
| | 91,739 |
| | — |
| | — |
| | 125,771 |
| | 39,279 |
| | 1996 | | 2003 | | (1) | One Freedom Square | | Office | | Reston, VA | | — |
| | 9,929 |
| | 84,504 |
| | 26,981 |
| | 9,883 |
| | 111,531 |
| | — |
| | — |
| | 121,414 |
| | 49,037 |
| | 2000 | | 2003 | | (1) | Weston Corporate Center | | Office | | Weston, MA | | — |
| | 25,753 |
| | 92,312 |
| | (123 | ) | | 25,854 |
| | 92,088 |
| | — |
| | — |
| | 117,942 |
| | 23,125 |
| | 2010 | | 2001 | | (1) | Capital Gallery | | Office | | Washington, DC | | — |
| | 4,725 |
| | 29,565 |
| | 79,383 |
| | 6,128 |
| | 107,545 |
| | — |
| | — |
| | 113,673 |
| | 63,717 |
| | 1981/2006 | | 2007 | | (1) | Two Freedom Square | | Office | | Reston, VA | | — |
| | 13,930 |
| | 77,739 |
| | 17,167 |
| | 13,866 |
| | 94,970 |
| | — |
| | — |
| | 108,836 |
| | 46,532 |
| | 2001 | | 2003 | | (1) | One and Two Reston Overlook | | Office | | Reston, VA | | — |
| | 16,456 |
| | 66,192 |
| | 20,693 |
| | 15,074 |
| | 88,267 |
| | — |
| | — |
| | 103,341 |
| | 43,627 |
| | 1999 | | 2000 | | (1) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston Properties Limited Partnership Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | | | | | | | | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | Property Name | | Type | | Location | | Encumbrances | | Land | | Building | | 767 Fifth Avenue (the General Motors Building) | | Office | | New York, NY | | $ | 2,277,522 | | | $ | 1,796,252 | | | $ | 1,532,654 | | | $ | 227,450 | | | $ | 1,796,252 | | | $ | 1,760,104 | | | $ | — | | | $ | — | | | $ | 3,556,356 | | | $ | 364,145 | | | 1968/2019 | | 2013 | | (1) | Prudential Center | | Office | | Boston, MA | | — | | | 92,077 | | | 948,357 | | | 512,816 | | | 100,540 | | | 1,435,029 | | | 17,681 | | | — | | | 1,553,250 | | | 617,331 | | | 1965/1993/2002/2016-2017 | | 1998/1999/2000 | | (1) | Embarcadero Center | | Office | | San Francisco, CA | | — | | | 179,697 | | | 847,410 | | | 407,480 | | | 180,420 | | | 1,254,167 | | | — | | | — | | | 1,434,587 | | | 662,756 | | | 1970/1989 | | 1998-1999 | | (1) | 399 Park Avenue | | Office | | New York, NY | | — | | | 339,200 | | | 700,358 | | | 281,352 | | | 339,200 | | | 981,710 | | | — | | | — | | | 1,320,910 | | | 370,361 | | | 1961/2018 | | 2002 | | (1) | Salesforce Tower | | Office | | San Francisco, CA | | — | | | 200,349 | | | 946,205 | | | 5,355 | | | 200,349 | | | 951,560 | | | — | | | — | | | 1,151,909 | | | 68,918 | | | 2018 | | 2013 | | (1) | 601 Lexington Avenue | | Office | | New York, NY | | 630,068 | | | 241,600 | | | 494,782 | | | 409,864 | | | 279,281 | | | 636,966 | | | — | | | 229,999 | | | 1,146,246 | | | 274,343 | | | 1977/1997 | | 2001 | | (1) | 200 Clarendon Street and Garage | | Office | | Boston, MA | | — | | | 219,543 | | | 667,884 | | | 218,821 | | | 251,374 | | | 854,874 | | | — | | | — | | | 1,106,248 | | | 244,882 | | | 1976 | | 2010 | | (1) | 250 West 55th Street | | Office | | New York, NY | | — | | | 285,263 | | | 603,167 | | | 51,860 | | | 285,263 | | | 655,027 | | | — | | | — | | | 940,290 | | | 138,004 | | | 2014 | | 2007 | | (1) | 100 Federal Street | | Office | | Boston, MA | | — | | | 131,067 | | | 435,954 | | | 111,196 | | | 131,067 | | | 547,150 | | | — | | | — | | | 678,217 | | | 141,629 | | | 1971-1975/2017 | | 2012 | | (1) | Times Square Tower | | Office | | New York, NY | | — | | | 165,413 | | | 380,438 | | | 70,227 | | | 159,694 | | | 456,384 | | | — | | | — | | | 616,078 | | | 207,106 | | | 2004 | | 2000 | | (1) | Carnegie Center | | Office | | Princeton, NJ | | — | | | 142,666 | | | 316,856 | | | 138,834 | | | 90,498 | | | 452,738 | | | 55,120 | | | — | | | 598,356 | | | 217,092 | | | 1983-2016 | | 1998/1999/2000/2007/2014/2017/2019 | | (1) | Atlantic Wharf | | Office | | Boston, MA | | — | | | 63,988 | | | 454,537 | | | 18,538 | | | 63,988 | | | 473,075 | | | — | | | — | | | 537,063 | | | 146,860 | | | 2011 | | 2007 | | (1) | 510 Madison Avenue | | Office | | New York, NY | | — | | | 103,000 | | | 253,665 | | | 28,446 | | | 103,000 | | | 282,111 | | | — | | | — | | | 385,111 | | | 81,517 | | | 2012 | | 2010 | | (1) | Fountain Square | | Office | | Reston, VA | | — | | | 56,853 | | | 306,298 | | | 21,030 | | | 56,853 | | | 327,328 | | | — | | | — | | | 384,181 | | | 90,047 | | | 1986-1990 | | 2012 | | (1) | 599 Lexington Avenue | | Office | | New York, NY | | — | | | 81,040 | | | 100,507 | | | 187,033 | | | 81,040 | | | 287,540 | | | — | | | — | | | 368,580 | | | 185,354 | | | 1986 | | 1997 | | (1) | 680 Folsom Street | | Office | | San Francisco, CA | | — | | | 72,545 | | | 219,766 | | | 7,917 | | | 72,545 | | | 227,683 | | | — | | | — | | | 300,228 | | | 55,319 | | | 2014 | | 2012 | | (1) | 145 Broadway | | Office | | Cambridge, MA | | — | | | 121 | | | 273,013 | | | 25,509 | | | 23,164 | | | 275,479 | | | — | | | — | | | 298,643 | | | 9,941 | | | 2019 | | 1997 | | (1) | 2200 Pennsylvania Avenue | | Office | | Washington, DC | | — | | | 0 | | | 183,541 | | | 112,436 | | | 107,356 | | | 188,621 | | | — | | | — | | | 295,977 | | | 66,072 | | | 2011 | | 2008 | | (1) | South of Market and Democracy Tower | | Office | | Reston, VA | | — | | | 13,603 | | | 237,479 | | | 40,827 | | | 13,603 | | | 278,306 | | | — | | | — | | | 291,909 | | | 107,279 | | | 2008-2009 | | 2003 | | (1) | 601 Massachusetts Avenue | | Office | | Washington, DC | | — | | | 95,310 | | | 165,173 | | | 3,933 | | | 95,310 | | | 169,106 | | | — | | | — | | | 264,416 | | | 30,743 | | | 2016 | | 2008 | | (1) | Bay Colony Corporate Center | | Office | | Waltham, MA | | — | | | 18,789 | | | 148,451 | | | 81,302 | | | 18,789 | | | 229,753 | | | — | | | — | | | 248,542 | | | 89,232 | | | 1985-1989 | | 2011 | | (1) | 535 Mission Street | | Office | | San Francisco, CA | | — | | | 40,933 | | | 148,378 | | | 3,287 | | | 40,933 | | | 151,665 | | | — | | | — | | | 192,598 | | | 31,953 | | | 2015 | | 2013 | | (1) | Mountain View Research Park | | Office | | Mountain View, CA | | — | | | 95,066 | | | 68,373 | | | 18,479 | | | 95,066 | | | 86,852 | | | — | | | — | | | 181,918 | | | 21,725 | | | 1977-1981/2007-2013 | | 2013 | | (1) | Reservoir Place | | Office | | Waltham, MA | | — | | | 18,605 | | | 104,124 | | | 53,079 | | | 19,089 | | | 156,719 | | | — | | | — | | | 175,808 | | | 75,841 | | | 1955/1987/2017 | | 1997/1998 | | (1) | 1330 Connecticut Avenue | | Office | | Washington, DC | | — | | | 25,982 | | | 82,311 | | | 32,436 | | | 25,982 | | | 114,747 | | | — | | | — | | | 140,729 | | | 36,695 | | | 1984/2018 | | 2004 | | (1) | Kingstowne Towne Center | | Office | | Alexandria, VA | | — | | | 18,021 | | | 109,038 | | | 3,135 | | | 18,021 | | | 112,173 | | | — | | | — | | | 130,194 | | | 46,430 | | | 2003-2006 | | 2007 | | (1) | One Freedom Square | | Office | | Reston, VA | | — | | | 9,929 | | | 84,504 | | | 34,247 | | | 9,883 | | | 118,797 | | | — | | | — | | | 128,680 | | | 61,215 | | | 2000 | | 2003 | | (1) | One and Two Reston Overlook | | Office | | Reston, VA | | — | | | 16,456 | | | 66,192 | | | 42,344 | | | 15,074 | | | 109,918 | | | — | | | — | | | 124,992 | | | 56,191 | | | 1999 | | 2000 | | (1) | Weston Corporate Center | | Office | | Weston, MA | | — | | | 25,753 | | | 92,312 | | | (5) | | | 25,854 | | | 92,206 | | | — | | | — | | | 118,060 | | | 32,278 | | | 2010 | | 2001 | | (1) | 17Fifty Presidents Street | | Office | | Reston, VA | | — | | | 0 | | | 113,362 | | | 0 | | | 0 | | | 113,362 | | | — | | | — | | | 113,362 | | | 3,466 | | | 2020 | | 2013 | | (1) | Two Freedom Square | | Office | | Reston, VA | | — | | | 13,930 | | | 77,739 | | | 19,298 | | | 13,866 | | | 97,101 | | | — | | | — | | | 110,967 | | | 52,128 | | | 2001 | | 2003 | | (1) | 140 Kendrick Street | | Office | | Needham, MA | | — | | | 18,095 | | | 66,905 | | | 22,468 | | | 18,095 | | | 89,373 | | | — | | | — | | | 107,468 | | | 34,790 | | | 2000 | | 2004 | | (1) |
Boston Properties Limited Partnership Schedule 3—Real Estate and Accumulated Depreciation December 31, 2017 (dollars in thousands)
| | | Boston Properties Limited Partnership Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | | Boston Properties Limited Partnership Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | | | | | | | | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | | | | | | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | Property Name | | Type | | Location | | Encumbrances | | Land | | Building | | Property Name | | Type | | Location | | Encumbrances | | Land | | Building | | 355 Main Street | | 355 Main Street | | Office | | Cambridge, MA | | — | | | 18,863 | | | 53,346 | | | 27,295 | | | 21,098 | | | 78,406 | | | — | | | — | | | 99,504 | | | 29,397 | | | 1981/1996/2013 | | 2006 | | (1) | Discovery Square | | Office | | Reston, VA | | — |
| | 11,198 |
| | 71,782 |
| | 18,869 |
| | 11,146 |
| | 90,703 |
| | — |
| | — |
| | 101,849 |
| | 41,928 |
| | 2001 | | 2003 | | (1) | Discovery Square | | Office | | Reston, VA | | — | | | 11,198 | | | 71,782 | | | 15,197 | | | 11,146 | | | 87,031 | | | — | | | — | | | 98,177 | | | 44,352 | | | 2001 | | 2003 | | (1) | 355 Main Street | | Office | | Cambridge, MA | | — |
| | 18,863 |
| | 53,346 |
| | 27,152 |
| | 21,098 |
| | 78,263 |
| | — |
| | — |
| | 99,361 |
| | 26,850 |
| | 1981/1996/2013 | | 2006 | | (1) | | 140 Kendrick Street | | Office | | Needham, MA | | — |
| | 18,095 |
| | 66,905 |
| | 13,502 |
| | 18,095 |
| | 80,407 |
| | — |
| | — |
| | 98,502 |
| | 28,111 |
| | 2000 | | 2004 | | (1) | | 880 & 890 Winter Street | | 880 & 890 Winter Street | | Office | | Waltham, MA | | — | | | 29,510 | | | 65,812 | | | 1,367 | | | 29,510 | | | 66,561 | | | 618 | | | — | | | 96,689 | | | 5,706 | | | 1998-1999 | | 2019 | | (1) | 10 CityPoint | | Office | | Waltham, MA | | — |
| | 1,953 |
| | 85,752 |
| | 2,670 |
| | 1,953 |
| | 88,422 |
| | — |
| | — |
| | 90,375 |
| | 4,673 |
| | 2016 | | 1997 | | (1) | 10 CityPoint | | Office | | Waltham, MA | | — | | | 1,953 | | | 85,752 | | | 4,581 | | | 2,127 | | | 90,159 | | | — | | | — | | | 92,286 | | | 14,073 | | | 2016 | | 1997 | | (1) | 90 Broadway | | Office | | Cambridge, MA | | — |
| | 19,104 |
| | 52,078 |
| | 17,001 |
| | 20,741 |
| | 67,442 |
| | — |
| | — |
| | 88,183 |
| | 19,220 |
| | 1983/1998/2013 | | 2006 | | (1) | 90 Broadway | | Office | | Cambridge, MA | | — | | | 19,104 | | | 52,078 | | | 17,898 | | | 20,741 | | | 68,339 | | | — | | | — | | | 89,080 | | | 24,156 | | | 1983/1998/2013 | | 2006 | | (1) | 77 CityPoint | | 77 CityPoint | | Office | | Waltham, MA | | — | | | 13,847 | | | 60,383 | | | 11,832 | | | 13,997 | | | 72,065 | | | — | | | — | | | 86,062 | | | 29,665 | | | 2008 | | 2001 | | (1) | 230 CityPoint | | Office | | Waltham, MA | | — |
| | 13,189 |
| | 49,823 |
| | 23,619 |
| | 13,189 |
| | 73,442 |
| | — |
| | — |
| | 86,631 |
| | 26,200 |
| | 1992 | | 2005 | | (1) | 230 CityPoint | | Office | | Waltham, MA | | — | | | 13,189 | | | 49,823 | | | 22,341 | | | 13,403 | | | 71,950 | | | — | | | — | | | 85,353 | | | 32,224 | | | 1992 | | 2005 | | (1) | 77 CityPoint | | Office | | Waltham, MA | | — |
| | 13,847 |
| | 60,383 |
| | 5,598 |
| | 13,847 |
| | 65,981 |
| | — |
| | — |
| | 79,828 |
| | 23,024 |
| | 2008 | | 2001 | | (1) | | Waltham Weston Corporate Center | | Office | | Waltham, MA | | — |
| | 10,385 |
| | 60,694 |
| | 8,043 |
| | 10,350 |
| | 68,772 |
| | — |
| | — |
| | 79,122 |
| | 29,359 |
| | 2003 | | 1999 | | (1) | Waltham Weston Corporate Center | | Office | | Waltham, MA | | — | | | 10,385 | | | 60,694 | | | 10,164 | | | 10,350 | | | 70,893 | | | — | | | — | | | 81,243 | | | 37,273 | | | 2003 | | 1999 | | (1) | 3625-3635 Peterson Way | | Office | | Santa Clara, CA | | — |
| | 63,206 |
| | 14,879 |
| | 138 |
| | 63,206 |
| | 14,879 |
| | 138 |
| | — |
| | 78,223 |
| | 5,120 |
| | 1979 | | 2016 | | (1) | 3625-3635 Peterson Way | | Office | | Santa Clara, CA | | — | | | 63,206 | | | 14,879 | | | 907 | | | 63,206 | | | 14,879 | | | 907 | | | — | | | 78,992 | | | 14,198 | | | 1979 | | 2016 | | (1) | North First Business Park | | Office | | San Jose, CA | | — |
| | 58,402 |
| | 13,069 |
| | 4,393 |
| | 23,371 |
| | 16,583 |
| | 35,910 |
| | — |
| | 75,864 |
| | 15,839 |
| | 1981 | | 2007 | | (1) | | 20 CityPoint | | 20 CityPoint | | Office | | Waltham, MA | | — | | | 4,887 | | | 72,764 | | | 0 | | | 4,887 | | | 72,764 | | | — | | | — | | | 77,651 | | | 3,325 | | | 2020 | | 2007 | | (1) | 2440 West El Camino Real | | 2440 West El Camino Real | | Office | | Mountain View, CA | | — | | | 16,741 | | | 51,285 | | | 5,518 | | | 16,741 | | | 56,803 | | | — | | | — | | | 73,544 | | | 15,215 | | | 1987/2003 | | 2011 | | (1) | 191 Spring Street | | 191 Spring Street | | Office | | Lexington, MA | | — | | | 2,850 | | | 59,751 | | | 6,911 | | | 2,850 | | | 66,662 | | | — | | | — | | | 69,512 | | | 24,150 | | | 1971/1995/2018 | | 1997 | | (1) | 300 Binney Street | | Office | | Cambridge, MA | | — |
| | 18,080 |
| | 51,262 |
| | 140 |
| | 18,080 |
| | 51,402 |
| | — |
| | — |
| | 69,482 |
| | 7,755 |
| | 2013 | | 2009 | | (1) | 300 Binney Street | | Office | | Cambridge, MA | | — | | | 18,080 | | | 51,262 | | | 140 | | | 18,080 | | | 51,402 | | | — | | | — | | | 69,482 | | | 12,842 | | | 2013 | | 2009 | | (1) | 2440 West El Camino Real | | Office | | Mountain View, CA | | — |
| | 16,741 |
| | 51,285 |
| | 1,287 |
| | 16,741 |
| | 52,572 |
| | — |
| | — |
| | 69,313 |
| | 10,790 |
| | 1987/2003 | | 2011 | | (1) | | Wisconsin Place | | Office | | Chevy Chase, MD | | — |
| | — |
| | 53,349 |
| | 14,907 |
| | — |
| | 68,256 |
| | — |
| | — |
| | 68,256 |
| | 19,775 |
| | 2009 | | 2004 | | (1) | Wisconsin Place | | Office | | Chevy Chase, MD | | — | | | 0 | | | 53,349 | | | 14,771 | | | 0 | | | 68,120 | | | — | | | — | | | 68,120 | | | 28,305 | | | 2009 | | 2004 | | (1) | Reston Corporate Center | | Office | | Reston, VA | | — |
| | 9,135 |
| | 50,857 |
| | 3,625 |
| | 9,496 |
| | 54,121 |
| | — |
| | — |
| | 63,617 |
| | 26,178 |
| | 1984 | | 1998 | | (1) | Reston Corporate Center | | Office | | Reston, VA | | — | | | 9,135 | | | 50,857 | | | 3,625 | | | 9,496 | | | 54,121 | | | — | | | — | | | 63,617 | | | 30,666 | | | 1984 | | 1998 | | (1) | New Dominion Technology Park, Bldg. Two | | Office | | Herndon, VA | | — |
| | 5,584 |
| | 51,868 |
| | 412 |
| | 5,574 |
| | 52,290 |
| | — |
| | — |
| | 57,864 |
| | 22,801 |
| | 2004 | | 1998 | | (1) | | 200 West Street | | Office | | Waltham, MA | | — |
| | 16,148 |
| | 24,983 |
| | 8,012 |
| | 16,148 |
| | 32,995 |
| | — |
| | — |
| | 49,143 |
| | 20,538 |
| | 1999 | | 1997 | | (1) | 200 West Street | | Office | | Waltham, MA | | — | | | 16,148 | | | 24,983 | | | 18,441 | | | 16,148 | | | 28,500 | | | 317 | | | 14,607 | | | 59,572 | | | 17,832 | | | 1999 | | 1997 | | (1) | New Dominion Technology Park, Bldg. One | | Office | | Herndon, VA | | 32,691 |
| | 3,880 |
| | 43,227 |
| | 1,072 |
| | 3,880 |
| | 44,299 |
| | — |
| | — |
| | 48,179 |
| | 25,304 |
| | 2001 | | 1998 | | (1) | | Sumner Square | | Office | | Washington, DC | | — |
| | 624 |
| | 28,745 |
| | 16,920 |
| | 958 |
| | 45,331 |
| | — |
| | — |
| | 46,289 |
| | 23,103 |
| | 1985 | | 1999 | | (1) | | 255 Main Street | | Office | | Cambridge, MA | | — |
| | 134 |
| | 25,110 |
| | 19,927 |
| | 134 |
| | 45,037 |
| | — |
| | — |
| | 45,171 |
| | 27,878 |
| | 1987 | | 1997 | | (1) | 255 Main Street | | Office | | Cambridge, MA | | — | | | 134 | | | 25,110 | | | 32,451 | | | 134 | | | 57,561 | | | — | | | — | | | 57,695 | | | 36,887 | | | 1987 | | 1997 | | (1) | University Place | | Office | | Cambridge, MA | | 7,407 |
| | — |
| | 37,091 |
| | 7,557 |
| | 27 |
| | 44,621 |
| | — |
| | — |
| | 44,648 |
| | 25,971 |
| | 1985 | | 1998 | | (1) | University Place | | Office | | Cambridge, MA | | 1,491 | | | 0 | | | 37,091 | | | 15,295 | | | 6,546 | | | 45,840 | | | — | | | — | | | 52,386 | | | 30,577 | | | 1985 | | 1998 | | (1) | 2600 Tower Oaks Boulevard | | Office | | Rockville, MD | | — |
| | 4,243 |
| | 31,125 |
| | 7,704 |
| | 4,244 |
| | 38,828 |
| | — |
| | — |
| | 43,072 |
| | 20,529 |
| | 2001 | | 1998 | | (1) | | Quorum Office Park | | Office | | Chelmsford, MA | | — |
| | 3,750 |
| | 32,454 |
| | 4,115 |
| | 4,762 |
| | 35,557 |
| | — |
| | — |
| | 40,319 |
| | 16,211 |
| | 2001 | | 2000 | | (1) | | 500 E Street | | Office | | Washington, DC | | — |
| | 109 |
| | 22,420 |
| | 11,503 |
| | 1,569 |
| | 32,463 |
| | — |
| | — |
| | 34,032 |
| | 23,051 |
| | 1987 | | 1997 | | (1) | | Sumner Square | | Sumner Square | | Office | | Washington, DC | | — | | | 624 | | | 28,745 | | | 18,316 | | | 1,731 | | | 45,954 | | | — | | | — | | | 47,685 | | | 27,744 | | | 1985 | | 1999 | | (1) | North First Business Park | | North First Business Park | | Office | | San Jose, CA | | — | | | 23,398 | | | 13,069 | | | 4,557 | | | 23,371 | | | 17,653 | | | — | | | — | | | 41,024 | | | 16,743 | | | 1981 | | 2007 | | (1) | Capital Gallery | | Capital Gallery | | Office | | Washington, DC | | — | | | 4,725 | | | 29,565 | | | 4,016 | | | 6,128 | | | 32,178 | | | — | | | — | | | 38,306 | | | 20,348 | | | 1981/2006 | | 2007 | | (1) | 150 Broadway | | Office | | Cambridge, MA | | — |
| | 850 |
| | 25,042 |
| | 6,535 |
| | 822 |
| | 31,605 |
| | — |
| | — |
| | 32,427 |
| | 16,477 |
| | 1999 | | 1997 | | (1) | 150 Broadway | | Office | | Cambridge, MA | | — | | | 850 | | | 25,042 | | | 248 | | | 822 | | | 25,318 | | | — | | | — | | | 26,140 | | | 13,584 | | | 1999 | | 1997 | | (1) | 325 Main Street | | Office | | Cambridge, MA | | — |
| | 174 |
| | 12,200 |
| | 11,192 |
| | 772 |
| | 22,794 |
| | — |
| | — |
| | 23,566 |
| | 12,675 |
| | 1987/2013 | | 1997 | | (1) | | 105 Broadway | | Office | | Cambridge, MA | | — |
| | 1,299 |
| | 12,943 |
| | 6,108 |
| | 1,868 |
| | 18,482 |
| | — |
| | — |
| | 20,350 |
| | 13,015 |
| | 1990 | | 1997 | | (1) | 105 Broadway | | Office | | Cambridge, MA | | — | | | 1,299 | | | 12,943 | | | 10,617 | | | 1,868 | | | 22,991 | | | — | | | — | | | 24,859 | | | 12,445 | | | 1990 | | 1997 | | (1) | Lexington Office Park | | Office | | Lexington, MA | | — |
| | 998 |
| | 1,426 |
| | 17,455 |
| | 1,073 |
| | 18,806 |
| | — |
| | — |
| | 19,879 |
| | 13,235 |
| | 1982 | | 1997 | | (1) | Lexington Office Park | | Office | | Lexington, MA | | — | | | 998 | | | 1,426 | | | 17,803 | | | 1,073 | | | 19,154 | | | — | | | — | | | 20,227 | | | 15,076 | | | 1982 | | 1997 | | (1) | 201 Spring Street | | Office | | Lexington, MA | | — |
| | 2,849 |
| | 15,303 |
| | (405 | ) | | 2,849 |
| | 14,898 |
| | — |
| | — |
| | 17,747 |
| | 7,681 |
| | 1997 | | 1997 | | (1) | 201 Spring Street | | Office | | Lexington, MA | | — | | | 2,849 | | | 15,303 | | | 25 | | | 2,849 | | | 15,328 | | | — | | | — | | | 18,177 | | | 8,672 | | | 1997 | | 1997 | | (1) | The Point | | Office | | Waltham, MA | | — |
| | 6,395 |
| | 10,040 |
| | 409 |
| | 6,480 |
| | 10,364 |
| | — |
| | — |
| | 16,844 |
| | 714 |
| | 2015 | | 2007 | | (1) | The Point | | Office | | Waltham, MA | | — | | | 6,395 | | | 10,040 | | | 421 | | | 6,492 | | | 10,364 | | | — | | | — | | | 16,856 | | | 1,667 | | | 2015 | | 2007 | | (1) | 690 Folsom Street | | Office | | San Francisco, CA | | — |
| | 3,219 |
| | 11,038 |
| | 1,157 |
| | 3,219 |
| | 12,195 |
| | — |
| | — |
| | 15,414 |
| | 1,295 |
| | 2015 | | 2012 | | (1) | 690 Folsom Street | | Office | | San Francisco, CA | | — | | | 3,219 | | | 11,038 | | | 1,157 | | | 3,219 | | | 12,195 | | | — | | | — | | | 15,414 | | | 2,778 | | | 2015 | | 2012 | | (1) | 91 Hartwell Avenue | | Office | | Lexington, MA | | — |
| | 784 |
| | 6,464 |
| | 7,642 |
| | 784 |
| | 14,106 |
| | — |
| | — |
| | 14,890 |
| | 9,705 |
| | 1985 | | 1997 | | (1) | | 33 Hayden Avenue | | 33 Hayden Avenue | | Office | | Lexington, MA | | — | | | 266 | | | 3,234 | | | 10,929 | | | 266 | | | 14,163 | | | — | | | — | | | 14,429 | | | 5,494 | | | 1979 | | 1997 | | (1) | 92-100 Hayden Avenue | | Office | | Lexington, MA | | — |
| | 594 |
| | 6,748 |
| | 7,452 |
| | 619 |
| | 14,175 |
| | — |
| | — |
| | 14,794 |
| | 12,329 |
| | 1985 | | 1997 | | (1) | 92-100 Hayden Avenue | | Office | | Lexington, MA | | — | | | 594 | | | 6,748 | | | 6,940 | | | 619 | | | 13,663 | | | — | | | — | | | 14,282 | | | 12,300 | | | 1985 | | 1997 | | (1) | 181 Spring Street | | Office | | Lexington, MA | | — |
| | 1,066 |
| | 9,520 |
| | 1,941 |
| | 1,066 |
| | 11,461 |
| | — |
| | — |
| | 12,527 |
| | 5,109 |
| | 1999 | | 1997 | | (1) | 181 Spring Street | | Office | | Lexington, MA | | — | | | 1,066 | | | 9,520 | | | 1,800 | | | 1,066 | | | 11,320 | | | — | | | — | | | 12,386 | | | 5,802 | | | 1999 | | 1997 | | (1) | 195 West Street | | Office | | Waltham, MA | | — |
| | 1,611 |
| | 6,652 |
| | 3,351 |
| | 1,611 |
| | 10,003 |
| | — |
| | — |
| | 11,614 |
| | 7,736 |
| | 1990 | | 1997 | | (1) | 195 West Street | | Office | | Waltham, MA | | — | | | 1,611 | | | 6,652 | | | 3,232 | | | 1,611 | | | 9,884 | | | — | | | — | | | 11,495 | | | 8,306 | | | 1990 | | 1997 | | (1) | 33 Hayden Avenue | | Office | | Lexington, MA | | — |
| | 266 |
| | 3,234 |
| | 7,744 |
| | 266 |
| | 10,978 |
| | — |
| | — |
| | 11,244 |
| | 8,067 |
| | 1979 | | 1997 | | (1) | | 7501 Boston Boulevard, Building Seven | | 7501 Boston Boulevard, Building Seven | | Office | | Springfield, VA | | — | | | 665 | | | 9,273 | | | 314 | | | 665 | | | 9,587 | | | — | | | — | | | 10,252 | | | 5,520 | | | 1997 | | 1997 | | (1) | 7435 Boston Boulevard, Building One | | 7435 Boston Boulevard, Building One | | Office | | Springfield, VA | | — | | | 392 | | | 3,822 | | | 4,323 | | | 486 | | | 8,051 | | | — | | | — | | | 8,537 | | | 6,561 | | | 1982 | | 1997 | | (1) | 32 Hartwell Avenue | | 32 Hartwell Avenue | | Office | | Lexington, MA | | — | | | 168 | | | 1,943 | | | 6,358 | | | 168 | | | 8,301 | | | — | | | — | | | 8,469 | | | 2,199 | | | 1968/1979/1987 | | 1997 | | (1) | 7450 Boston Boulevard, Building Three | | 7450 Boston Boulevard, Building Three | | Office | | Springfield, VA | | — | | | 1,165 | | | 4,681 | | | 2,177 | | | 1,327 | | | 6,696 | | | — | | | — | | | 8,023 | | | 3,983 | | | 1987 | | 1998 | | (1) |
Boston Properties Limited Partnership Schedule 3—Real Estate and Accumulated Depreciation December 31, 2017 (dollars in thousands)
| | | Boston Properties Limited Partnership Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | | Boston Properties Limited Partnership Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | | | | | | | | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | | | | | | | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | Property Name | | Type | | Location | | Encumbrances | | Land | | Building | | Property Name | | Type | | Location | | Encumbrances | | Land | | Building | | 7501 Boston Boulevard, Building Seven | | Office | | Springfield, VA | | — |
| | 665 |
| | 9,273 |
| | 314 |
| | 665 |
| | 9,587 |
| | — |
| | — |
| | 10,252 |
| | 4,732 |
| | 1997 | | 1997 | | (1) | | 250 Binney Street | | Office | | Cambridge, MA | | — |
| | 110 |
| | 4,483 |
| | 2,939 |
| | 110 |
| | 7,422 |
| | — |
| | — |
| | 7,532 |
| | 4,922 |
| | 1983 | | 1997 | | (1) | 250 Binney Street | | Office | | Cambridge, MA | | — | | | 110 | | | 4,483 | | | 2,939 | | | 110 | | | 7,422 | | | — | | | — | | | 7,532 | | | 6,030 | | | 1983 | | 1997 | | (1) | 7435 Boston Boulevard, Building One | | Office | | Springfield, VA | | — |
| | 392 |
| | 3,822 |
| | 3,304 |
| | 486 |
| | 7,032 |
| | — |
| | — |
| | 7,518 |
| | 5,354 |
| | 1982 | | 1997 | | (1) | | 8000 Grainger Court, Building Five | | Office | | Springfield, VA | | — |
| | 366 |
| | 4,282 |
| | 2,781 |
| | 453 |
| | 6,976 |
| | — |
| | — |
| | 7,429 |
| | 5,511 |
| | 1984 | | 1997 | | (1) | 8000 Grainger Court, Building Five | | Office | | Springfield, VA | | — | | | 366 | | | 4,282 | | | 2,604 | | | 453 | | | 6,799 | | | — | | | — | | | 7,252 | | | 5,756 | | | 1984 | | 1997 | | (1) | 7450 Boston Boulevard, Building Three | | Office | | Springfield, VA | | — |
| | 1,165 |
| | 4,681 |
| | 1,359 |
| | 1,327 |
| | 5,878 |
| | — |
| | — |
| | 7,205 |
| | 3,354 |
| | 1987 | | 1998 | | (1) | | 453 Ravendale Drive | | Office | | Mountain View, CA | | — |
| | 5,477 |
| | 1,090 |
| | 408 |
| | 5,477 |
| | 1,498 |
| | — |
| | — |
| | 6,975 |
| | 472 |
| | 1977 | | 2012 | | (1) | 453 Ravendale Drive | | Office | | Mountain View, CA | | — | | | 5,477 | | | 1,090 | | | 676 | | | 5,477 | | | 1,766 | | | — | | | — | | | 7,243 | | | 819 | | | 1977 | | 2012 | | (1) | 7300 Boston Boulevard, Building Thirteen | | 7300 Boston Boulevard, Building Thirteen | | Office | | Springfield, VA | | — | | | 608 | | | 4,773 | | | 863 | | | 608 | | | 5,636 | | | — | | | — | | | 6,244 | | | 2,209 | | | 2002 | | 1997 | | (1) | 17 Hartwell Avenue | | Office | | Lexington, MA | | — |
| | 26 |
| | 150 |
| | 6,095 |
| | 26 |
| | 6,245 |
| | — |
| | — |
| | 6,271 |
| | 1,062 |
| | 1968 | | 1997 | | (1) | 17 Hartwell Avenue | | Office | | Lexington, MA | | — | | | 26 | | | 150 | | | 5,907 | | | 26 | | | 6,057 | | | — | | | — | | | 6,083 | | | 2,442 | | | 1968 | | 1997 | | (1) | 7300 Boston Boulevard, Building Thirteen | | Office | | Springfield, VA | | — |
| | 608 |
| | 4,773 |
| | 497 |
| | 608 |
| | 5,270 |
| | — |
| | — |
| | 5,878 |
| | 2,737 |
| | 2002 | | 1997 | | (1) | | 7601 Boston Boulevard, Building Eight | | Office | | Springfield, VA | | — |
| | 200 |
| | 878 |
| | 4,359 |
| | 378 |
| | 5,059 |
| | — |
| | — |
| | 5,437 |
| | 4,107 |
| | 1986 | | 1997 | | (1) | 7601 Boston Boulevard, Building Eight | | Office | | Springfield, VA | | — | | | 200 | | | 878 | | | 4,342 | | | 378 | | | 5,042 | | | — | | | — | | | 5,420 | | | 4,643 | | | 1986 | | 1997 | | (1) | 7500 Boston Boulevard, Building Six | | Office | | Springfield, VA | | — |
| | 138 |
| | 3,749 |
| | 1,122 |
| | 273 |
| | 4,736 |
| | — |
| | — |
| | 5,009 |
| | 3,845 |
| | 1985 | | 1997 | | (1) | 7500 Boston Boulevard, Building Six | | Office | | Springfield, VA | | — | | | 138 | | | 3,749 | | | 1,107 | | | 234 | | | 4,760 | | | — | | | — | | | 4,994 | | | 4,249 | | | 1985 | | 1997 | | (1) | 8000 Corporate Court, Building Eleven | | Office | | Springfield, VA | | — |
| | 136 |
| | 3,071 |
| | 1,245 |
| | 686 |
| | 3,766 |
| | — |
| | — |
| | 4,452 |
| | 2,826 |
| | 1989 | | 1997 | | (1) | 8000 Corporate Court, Building Eleven | | Office | | Springfield, VA | | — | | | 136 | | | 3,071 | | | 1,298 | | | 686 | | | 3,819 | | | — | | | — | | | 4,505 | | | 3,217 | | | 1989 | | 1997 | | (1) | 7375 Boston Boulevard, Building Ten | | Office | | Springfield, VA | | — |
| | 23 |
| | 2,685 |
| | 757 |
| | 47 |
| | 3,418 |
| | — |
| | — |
| | 3,465 |
| | 2,532 |
| | 1988 | | 1997 | | (1) | 7375 Boston Boulevard, Building Ten | | Office | | Springfield, VA | | — | | | 23 | | | 2,685 | | | 854 | | | 47 | | | 3,515 | | | — | | | — | | | 3,562 | | | 2,676 | | | 1988 | | 1997 | | (1) | 7374 Boston Boulevard, Building Four | | Office | | Springfield, VA | | — |
| | 241 |
| | 1,605 |
| | 1,530 |
| | 303 |
| | 3,073 |
| | — |
| | — |
| | 3,376 |
| | 2,494 |
| | 1984 | | 1997 | | (1) | 7374 Boston Boulevard, Building Four | | Office | | Springfield, VA | | — | | | 241 | | | 1,605 | | | 1,438 | | | 303 | | | 2,981 | | | — | | | — | | | 3,284 | | | 2,765 | | | 1984 | | 1997 | | (1) | 7451 Boston Boulevard, Building Two | | Office | | Springfield, VA | | — |
| | 249 |
| | 1,542 |
| | 1,346 |
| | 535 |
| | 2,602 |
| | — |
| | — |
| | 3,137 |
| | 2,357 |
| | 1982 | | 1997 | | (1) | 7451 Boston Boulevard, Building Two | | Office | | Springfield, VA | | — | | | 249 | | | 1,542 | | | 1,345 | | | 535 | | | 2,601 | | | — | | | — | | | 3,136 | | | 2,609 | | | 1982 | | 1997 | | (1) | 32 Hartwell Avenue | | Office | | Lexington, MA | | — |
| | 168 |
| | 1,943 |
| | 426 |
| | 168 |
| | 2,369 |
| | — |
| | — |
| | 2,537 |
| | 1,840 |
| | 1968/1979/1987 | | 1997 | | (1) | | 164 Lexington Road | | Office | | Billerica, MA | | — |
| | 592 |
| | 1,370 |
| | 117 |
| | 592 |
| | 1,487 |
| | — |
| | — |
| | 2,079 |
| | 819 |
| | 1982 | | 1997 | | (1) | | The Skylyne | | The Skylyne | | Residential | | Oakland, CA | | — | | | 28,962 | | | 239,077 | | | 0 | | | 28,962 | | | 239,077 | | | — | | | — | | | 268,039 | | | 2,128 | | | 2020 | | N/A | | (1) | Signature at Reston | | Signature at Reston | | Residential | | Reston, VA | | — | | | 27,076 | | | 190,580 | | | 659 | | | 27,076 | | | 191,239 | | | — | | | — | | | 218,315 | | | 13,650 | | | 2018 | | 2013 | | (1) | Proto Kendall Square | | Proto Kendall Square | | Residential | | Cambridge, MA | | — | | | 9,243 | | | 127,248 | | | 3,336 | | | 9,245 | | | 130,582 | | | — | | | — | | | 139,827 | | | 7,883 | | | 2018 | | 2015 | | (1) | The Avant at Reston Town Center | | Residential | | Reston, VA | | — |
| | 20,350 |
| | 91,995 |
| | 830 |
| | 20,350 |
| | 92,825 |
| | — |
| | — |
| | 113,175 |
| | 9,780 |
| | 2014 | | 2010 | | (1) | The Avant at Reston Town Center | | Residential | | Reston, VA | | — | | | 20,350 | | | 91,995 | | | 846 | | | 20,350 | | | 92,841 | | | — | | | — | | | 113,191 | | | 17,204 | | | 2014 | | 2010 | | (1) | The Lofts at Atlantic Wharf | | Residential | | Boston, MA | | — |
| | 3,529 |
| | 54,891 |
| | 1,768 |
| | 3,529 |
| | 56,659 |
| | — |
| | — |
| | 60,188 |
| | 9,622 |
| | 2011 | | 2007 | | (1) | The Lofts at Atlantic Wharf | | Residential | | Boston, MA | | — | | | 3,529 | | | 54,891 | | | 2,129 | | | 3,529 | | | 57,020 | | | — | | | — | | | 60,549 | | | 14,166 | | | 2011 | | 2007 | | (1) | Boston Marriott Cambridge | | Hotel | | Cambridge, MA | | — |
| | 478 |
| | 37,918 |
| | 35,908 |
| | 478 |
| | 73,826 |
| | — |
| | — |
| | 74,304 |
| | 47,101 |
| | 1986 | | 1997 | | (1) | Boston Marriott Cambridge | | Hotel | | Cambridge, MA | | — | | | 478 | | | 37,918 | | | 32,595 | | | 478 | | | 70,513 | | | — | | | — | | | 70,991 | | | 48,286 | | | 1986/2017 | | 1997 | | (1) | Kendall Center Green Garage | | Garage | | Cambridge, MA | | — |
| | — |
| | 35,035 |
| | 7,034 |
| | — |
| | 42,069 |
| | — |
| | — |
| | 42,069 |
| | 10,687 |
| | 1984 | | 2006 | | (1) | Kendall Center Green Garage | | Garage | | Cambridge, MA | | — | | | 0 | | | 35,035 | | | 6,432 | | | 0 | | | 41,467 | | | — | | | — | | | 41,467 | | | 14,327 | | | 1984 | | 2006 | | (1) | Kendall Center Yellow Garage | | Garage | | Cambridge, MA | | — |
| | 1,256 |
| | 15,697 |
| | 909 |
| | 1,256 |
| | 16,606 |
| | — |
| | — |
| | 17,862 |
| | 5,024 |
| | 2006 | | 2004 | | (1) | Kendall Center Yellow Garage | | Garage | | Cambridge, MA | | — | | | 1,256 | | | 15,697 | | | 840 | | | 1,256 | | | 16,537 | | | — | | | — | | | 17,793 | | | 6,287 | | | 2006 | | 2004 | | (1) | Kendall Center Blue Garage | | Garage | | Cambridge, MA | | — |
| | 1,163 |
| | 11,633 |
| | 618 |
| | 1,163 |
| | 12,251 |
| | — |
| | — |
| | 13,414 |
| | 8,834 |
| | 1990 | | 1997 | | (1) | Kendall Center Blue Garage | | Garage | | Cambridge, MA | | — | | | 1,163 | | | 11,633 | | | 446 | | | 1,163 | | | 12,079 | | | — | | | — | | | 13,242 | | | 9,576 | | | 1990 | | 1997 | | (1) | Salesforce Tower | | Development | | San Francisco, CA | | — |
| | — |
| | — |
| | 947,106 |
| | 200,349 |
| | 55,318 |
| | — |
| | 691,439 |
| | 947,106 |
| | 116 |
| | N/A | | 2013 | | N/A | | Signature at Reston | | Development | | Reston, VA | | — |
| | — |
| | — |
| | 203,650 |
| | — |
| | — |
| | — |
| | 203,650 |
| | 203,650 |
| | — |
| | N/A | | 2013 | | N/A | | Proto Kendall Square | | Development | | Cambridge, MA | | — |
| | — |
| | — |
| | 82,905 |
| | — |
| | — |
| | — |
| | 82,905 |
| | 82,905 |
| | — |
| | N/A | | 2015 | | N/A | | 145 Broadway | | Development | | Cambridge, MA | | — |
| | 121 |
| | — |
| | 79,776 |
| | 121 |
| | — |
| | — |
| | 79,776 |
| | 79,897 |
| | — |
| | NA | | 1997 | | N/A | | 191 Spring Street | | Development | | Lexington, MA | | — |
| | 2,850 |
| | 27,166 |
| | 34,542 |
| | 2,850 |
| | 45,957 |
| | — |
| | 15,751 |
| | 64,558 |
| | 18,934 |
| | 1971/1995 | | 1997 | | (1) | | 6595 Springfield Center Drive (TSA Headquarters) | | Development | | Springfield, VA | | — |
| | — |
| | — |
| | 41,918 |
| | — |
| | — |
| | — |
| | 41,918 |
| | 41,918 |
| | — |
| | N/A | | 2007 | | N/A | | Reston Next (formerly Reston Gateway) | | Reston Next (formerly Reston Gateway) | | Development | | Reston, VA | | — | | | 0 | | | 0 | | | 354,174 | | | 0 | | | 0 | | | — | | | 354,174 | | | 354,174 | | | 0 | | | N/A | | 1998 | | N/A | 2100 Pennsylvania Avenue | | 2100 Pennsylvania Avenue | | Development | | Washington, DC | | — | | | 0 | | | 0 | | | 294,445 | | | 185,129 | | | 0 | | | — | | | 109,316 | | | 294,445 | | | 3,481 | | | N/A | | N/A | | N/A | 325 Main Street | | 325 Main Street | | Development | | Cambridge, MA | | — | | | 174 | | | 0 | | | 161,275 | | | 772 | | | 0 | | | — | | | 160,677 | | | 161,449 | | | 0 | | | N/A | | 1997 | | N/A | 777 Harrison Street (formerly 425 Fourth Street) | | 777 Harrison Street (formerly 425 Fourth Street) | | Land | | San Francisco, CA | | — | | | 144,647 | | | 0 | | | 25,930 | | | 0 | | | 47 | | | 170,530 | | | — | | | 170,577 | | | 0 | | | N/A | | 2020 | | N/A | North First Master Plan | | North First Master Plan | | Land | | San Jose, CA | | — | | | 35,004 | | | 0 | | | 3,937 | | | 0 | | | 0 | | | 38,941 | | | — | | | 38,941 | | | 0 | | | N/A | | 2007 | | N/A | Plaza at Almaden | | Plaza at Almaden | | Land | | San Jose, CA | | — | | | 0 | | | 0 | | | 36,431 | | | 0 | | | 0 | | | 36,431 | | | — | | | 36,431 | | | 0 | | | N/A | | 2006 | | N/A | Back Bay Station Master Plan | | Back Bay Station Master Plan | | Land | | Boston, MA | | — | | | 0 | | | 0 | | | 30,643 | | | 0 | | | 0 | | | 30,643 | | | — | | | 30,643 | | | 0 | | | N/A | | N/A | | N/A | Reston Gateway Master Plan | | Reston Gateway Master Plan | | Land | | Reston, VA | | — | | | 0 | | | 0 | | | 28,610 | | | 0 | | | 0 | | | 28,610 | | | — | | | 28,610 | | | 0 | | | N/A | | 1998 | | N/A | Springfield Metro Center | | Springfield Metro Center | | Land | | Springfield, VA | | — | | | 0 | | | 0 | | | 19,871 | | | 0 | | | 0 | | | 19,871 | | | — | | | 19,871 | | | 0 | | | N/A | | 2007 | | N/A | 214 Third Avenue | | 214 Third Avenue | | Land | | Waltham, MA | | — | | | 0 | | | 0 | | | 19,206 | | | 0 | | | 0 | | | 19,206 | | | — | | | 19,206 | | | 0 | | | N/A | | 2006 | | N/A |
Boston Properties Limited Partnership Schedule 3—Real Estate and Accumulated Depreciation December 31, 2017 (dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | Property Name | | Type | | Location | | Encumbrances | | Land | | Building | | MacArthur Station Residences | | Development | | Oakland, CA | | — |
| | — |
| | — |
| | 37,644 |
| | — |
| | — |
| | — |
| | 37,644 |
| | 37,644 |
| | — |
| | N/A | | N/A | | N/A | 20 CityPoint | | Development | | Waltham, MA | | — |
| | — |
| | — |
| | 13,056 |
| | — |
| | — |
| | — |
| | 13,056 |
| | 13,056 |
| | — |
| | N/A | | 2007 | | N/A | Tower Oaks Master Plan | | Land | | Rockville, MD | | — |
| | — |
| | — |
| | 29,419 |
| | — |
| | — |
| | 29,419 |
| | — |
| | 29,419 |
| | — |
| | N/A | | 1998 | | N/A | Plaza at Almaden | | Land | | San Jose, CA | | — |
| | — |
| | — |
| | 29,085 |
| | — |
| | — |
| | 29,085 |
| | — |
| | 29,085 |
| | — |
| | N/A | | 2006 | | N/A | Springfield Metro Center | | Land | | Springfield, VA | | — |
| | — |
| | — |
| | 19,684 |
| | — |
| | — |
| | 19,684 |
| | — |
| | 19,684 |
| | — |
| | N/A | | 2007 | | N/A | 214 Third Avenue | | Land | | Waltham, MA | | — |
| | — |
| | — |
| | 13,815 |
| | — |
| | — |
| | 13,815 |
| | — |
| | 13,815 |
| | — |
| | N/A | | 2006 | | N/A | Reston Gateway | | Land | | Reston, VA | | — |
| | — |
| | — |
| | 13,730 |
| | — |
| | — |
| | 13,730 |
| | — |
| | 13,730 |
| | — |
| | N/A | | 1998 | | N/A | 103 Fourth Avenue | | Land | | Waltham, MA | | — |
| | — |
| | — |
| | 12,115 |
| | — |
| | — |
| | 12,115 |
| | — |
| | 12,115 |
| | — |
| | N/A | | 2007 | | N/A | Crane Meadow | | Land | | Marlborough, MA | | — |
| | — |
| | — |
| | 8,836 |
| | — |
| | — |
| | 8,836 |
| | — |
| | 8,836 |
| | — |
| | N/A | | 2000 | | N/A | Washingtonian North | | Land | | Gaithersburg, MD | | — |
| | — |
| | — |
| | 7,645 |
| | — |
| | — |
| | 7,645 |
| | — |
| | 7,645 |
| | — |
| | N/A | | 1998 | | N/A | 2100 Pennsylvania Avenue | | Land | | Washington, DC | | — |
| | — |
| | — |
| | 6,543 |
| | — |
| | — |
| | 6,543 |
| | — |
| | 6,543 |
| | — |
| | N/A | | N/A | | N/A | Fourth and Harrison | | Land | | San Francisco, CA | | — |
| | — |
| | — |
| | 5,659 |
| | — |
| | — |
| | 5,659 |
| | — |
| | 5,659 |
| | — |
| | N/A | | N/A | | N/A | North First Master Plan | | Land | | San Jose, CA | | — |
| | — |
| | — |
| | 3,018 |
| | — |
| | — |
| | 3,018 |
| | — |
| | 3,018 |
| | — |
| | N/A | | 2007 | | N/A | Broad Run Business Park | | Land | | Loudoun County, VA | | — |
| | — |
| | — |
| | 2,367 |
| | — |
| | — |
| | 2,367 |
| | — |
| | 2,367 |
| | — |
| | N/A | | 1998 | | N/A | Kendall Center Master Plan | | Land | | Cambridge, MA | | — |
| | — |
| | — |
| | 2,207 |
| | — |
| | — |
| | 2,207 |
| | — |
| | 2,207 |
| | — |
| | N/A | | N/A | | N/A | Weston Quarry | | Land | | Weston, MA | | — |
| | — |
| | — |
| | 1,194 |
| | — |
| | — |
| | 1,194 |
| | — |
| | 1,194 |
| | — |
| | N/A | | 2001 | | N/A | Reston Overlook Master Plan | | Land | | Reston, VA | | — |
| | — |
| | — |
| | 39 |
| | — |
| | — |
| | 39 |
| | — |
| | 39 |
| | — |
| | N/A | | 2000 | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,979,281 |
| (2 | ) | $ | 4,762,002 |
| | $ | 11,634,050 |
| | $ | 4,251,184 |
| | $ | 4,976,303 |
| | $ | 14,196,670 |
| | $ | 204,925 |
| (3 | ) | $ | 1,269,338 |
| | $ | 20,647,236 |
| | $ | 4,473,895 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Boston Properties Limited Partnership Schedule 3—Real Estate and Accumulated Depreciation December 31, 2020 (dollars in thousands) | | | | | | | | | Original | | Costs Capitalized Subsequent to Acquisition | | Land and Improvements | | Building and Improvements | | Land Held for Development | | Development and Construction in Progress | | Total | | Accumulated Depreciation | | Year(s) Built/ Renovated | | Year(s) Acquired | | Depreciable Lives (Years) | Property Name | | Type | | Location | | Encumbrances | | Land | | Building | | CityPoint South Master Plan | | Land | | Waltham, MA | | — | | | 0 | | | 0 | | | 13,363 | | | 0 | | | 0 | | | 13,363 | | | — | | | 13,363 | | | 0 | | | N/A | | N/A | | N/A | 103 Fourth Avenue | | Land | | Waltham, MA | | — | | | 0 | | | 0 | | | 12,888 | | | 0 | | | 0 | | | 12,888 | | | — | | | 12,888 | | | 0 | | | N/A | | 2007 | | N/A | Broad Run Business Park | | Land | | Loudoun County, VA | | — | | | 0 | | | 0 | | | 2,392 | | | 0 | | | 0 | | | 2,392 | | | — | | | 2,392 | | | 0 | | | N/A | | 1998 | | N/A | Kendall Center Master Plan | | Land | | Cambridge, MA | | — | | | 0 | | | 0 | | | 2,145 | | | 0 | | | 0 | | | 2,145 | | | — | | | 2,145 | | | 0 | | | N/A | | 1997 | | N/A | Weston Quarry | | Land | | Weston, MA | | — | | | 0 | | | 0 | | | 1,249 | | | 0 | | | 0 | | | 1,249 | | | — | | | 1,249 | | | 0 | | | N/A | | 2001 | | N/A | Reston Overlook Master Plan | | Land | | Reston, VA | | — | | | 0 | | | 0 | | | 42 | | | 0 | | | 0 | | | 42 | | | — | | | 42 | | | 0 | | | N/A | | 2000 | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,909,081 | | (2) | | $ | 5,160,116 | | | $ | 13,196,160 | | | $ | 4,570,218 | | | $ | 5,332,487 | | (3) | | $ | 16,274,280 | | (4) | | $ | 450,954 | | (5) | | $ | 868,773 | | | $ | 22,926,494 | | | $ | 5,396,111 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Total Real Estate does not include Furniture, Fixtures and Equipment totaling approximately $37,928.$49,606. Accumulated Depreciation does not include approximately $23,064$32,465 of accumulated depreciation related to Furniture, Fixtures and Equipment.
The aggregate cost and accumulated depreciation for tax purposes was approximately $19.3$23.0 billion and $4.1$5.0 billion, respectively. | | (1) | Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to 40 years. |
| | (2) | Includes unamortized deferred financing costs totaling approximately $(34.7) million. |
| | (3) | Includes pre-development costs. |
(1)Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to 40 years.
(2)Includes unamortized deferred financing costs totaling approximately $(22.9) million. (3)Includes Right of Use Assets - Finance Leases and Right of Use Assets - Operating Leases of approximately $214,091 and $148,640, respectively. (4)Includes Right of Use Assets - Finance Leases of approximately $23,302. (5)Includes pre-development costs.
Boston Properties Limited Partnership Real Estate and Accumulated Depreciation December 31, 2017, 20162020, 2019 and 20152018 (dollars in thousands) A summary of activity for real estate and accumulated depreciation is as follows: | | | | 2017 | | 2016 | | 2015 | | 2020 | | 2019 | | 2018 | Real Estate: | | | | | | | Real Estate: | | | | | | | Balance at the beginning of the year | | $ | 19,701,185 |
| | $ | 19,031,289 |
| | $ | 18,786,572 |
| Balance at the beginning of the year | | $ | 22,449,476 | | | $ | 21,207,189 | | | $ | 20,647,236 | | Additions to/improvements of real estate | | 1,099,286 |
| | 977,287 |
| | 700,792 |
| Additions to/improvements of real estate | | 996,989 | | | 1,671,898 | | | 1,043,379 | | Assets sold/written-off | | (153,235 | ) | | (307,391 | ) | | (456,075 | ) | Assets sold/written-off | | (519,971) | | | (429,611) | | | (483,426) | | Balance at the end of the year | | $ | 20,647,236 |
| | $ | 19,701,185 |
| | $ | 19,031,289 |
| Balance at the end of the year | | $ | 22,926,494 | | | $ | 22,449,476 | | | $ | 21,207,189 | | Accumulated Depreciation: | | | | | | | Accumulated Depreciation: | | | | | | | Balance at the beginning of the year | | $ | 4,116,020 |
| | $ | 3,826,862 |
| | $ | 3,458,640 |
| Balance at the beginning of the year | | $ | 5,135,289 | | | $ | 4,773,800 | | | $ | 4,473,895 | | Depreciation expense | | 488,919 |
| | 548,397 |
| | 478,457 |
| Depreciation expense | | 566,813 | | | 557,130 | | | 525,584 | | Assets sold/written-off | | (131,044 | ) | | (259,239 | ) | | (110,235 | ) | Assets sold/written-off | | (305,991) | | | (195,641) | | | (225,679) | | Balance at the end of the year | | $ | 4,473,895 |
| | $ | 4,116,020 |
| | $ | 3,826,862 |
| Balance at the end of the year | | $ | 5,396,111 | | | $ | 5,135,289 | | | $ | 4,773,800 | |
Note: Real Estate and Accumulated Depreciation amounts do not include Furniture, Fixtures and Equipment.
(b) Exhibits
| | | | | | | | | 2.1 |
| — | | 2.2 |
| — | | 3.1 |
| — | | 3.2 |
| — | | 3.3 |
| — | | 3.4 |
| — | | 3.5 |
| — | | 3.6 |
| — | | 3.7 | | — | | 4.1 |
| — | | 4.2 |
| — | | 4.3 | | — | Master Deposit Agreement among Boston Properties, Inc., Computershare Inc. and Computershare Trust Company, N.A., collectively, as depositary, and the holders from time to time of depositary shares as described therein, dated March 22, 2013. (Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form 8-A of Boston Properties, Inc. filed on March 22, 2013.) | 4.34.4 |
| — | | 4.44.5 |
| — | | 4.5 |
| — | | 4.6 |
| — | | 4.7 |
| — | |
| | | | | | | | | 4.104.8 |
| — | | 4.114.9 |
| — | | 4.124.10 |
| — | | 10.14.11 |
| — | | 4.12 | | — | | 4.13 | | — | | 4.14 | | — | | 10.1 | | — | | 10.2 |
| — | | 10.3 |
| — | | 10.4*10.4 |
| — | | 10.5*10.5 |
| — | | 10.6 |
| — | |
| | | | | | | | | 10.7 |
| — | | 10.8* |
| — | | 10.9* | — | | 10.9*10.10* |
| — | | 10.10*10.11* |
| — | |
| 10.12* | | | | 10.11* |
| — | | 10.12*10.13* |
| — | | 10.13*10.14* |
| — | | 10.14* |
| — | | 10.15* |
| — | | 10.16* |
| — | | 10.17* |
| — | | 10.18* |
| — | | 10.19* |
| — | | 10.20* |
| — | | 10.21* |
| — | | 10.22* |
| — | | 10.23* |
| — | | 10.24* |
| — | |
| 10.28* | | | | 10.28* |
| — | | 10.29* |
| — | | 10.30* |
| — | | 10.31* |
| — | | 10.32* |
| — | | 10.33*10.32* |
| — | | 10.33* | — | | 10.34* |
| — | | 10.35* |
| — | | 10.36* |
| — | | 10.37* |
| — | | 10.38* |
| — | | 10.39* |
| — | | 10.40* |
| — | | 10.41* |
| — | | 10.42* |
| — | | 10.4310.43* |
| — | |
| | | | | | | | | 10.44* |
| — | | 10.4510.45* |
| — | | 10.46 | | — | | 12.1 |
| — | |
| 21.1 | | | | 12.2 |
| — | | 21.1 |
| — | | 23.1 |
| — | | 23.2 |
| — | | 31.1 |
| — | | 31.2 |
| — | | 31.3 |
| — | | 31.4 |
| — | | 32.1 |
| — | | 32.2 |
| — | | 32.3 |
| — | | 32.4 |
| — | | 101101.SCH | — | — | The following materials from Boston Properties, Inc.’s and Boston Properties Limited Partnership’s Annual Reports on Form 10-K for the year ended December 31, 2017 formatted inInline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Partners’ Capital, (vi) the Consolidated Statements of Cash Flows, and (vii) related notes to these financial statements.Taxonomy Extension Schema Document. (Filed herewith.) | 101.CAL | — | Inline XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.) | 101.LAB | — | Inline XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.) | 101.PRE | — | Inline XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.) | 101.DEF | — | Inline XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.) | 104 | | — | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*). (Filed herewith.) | | | | * Indicates management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(b) of Form 10-K. |
Item 16. Form 10-K SummarySummary. Not Applicable.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Boston Properties, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. | | | | | | | | | | | | | | | | | BOSTON PROPERTIES, INC. | | | | February 28, 201826, 2021 | | /s/ MICHAEL E. LABELLE | | | Michael E. LaBelle | | | Chief Financial Officer | | | (duly authorized officer and principal financial officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Boston Properties, Inc., and in the capacities and on the dates indicated. | | | | | | | | | | | | | | | | | | | | February 26, 2021 | | | | | February 28, 2018 | | | | | | | | | | | | By: | | /s/ OWEN D. THOMAS
| | | | | Owen D. Thomas
Director, Chief Executive Officer and Principal Executive Officer
| | | | | | By: | | /s/ DOUGLAS T. LINDE
| | | | | Douglas T. Linde
Director and President
| | | | | | | | By: | | /s/ BRUCE W. DUNCAN
| | | | | Bruce W. Duncan
Director
| | | | | | | | By: | | /s/ KAREN E. DYKSTRA
| | | | | Karen E. Dykstra
Director
| | | | | | By: | | /s/ CAROL B. EINIGER
| | | | | Carol B. Einiger
Director
| | | | | | By: | | /s/ DR. JACOB A. FRENKEL
| | | | | Dr. Jacob A. Frenkel
Director
| | | | | | | | By: | | /s/ JOEL I. KLEIN
| | | | | Joel I. Klein
Director
| | | | | | By: | | /s/ MATTHEW J. LUSTIG
| | | | | Matthew J. Lustig
Director
|
| | | | | | | | | By: | | By: | | /s/ ALAN J. PATRICOF OWEN D. THOMAS | | | | | Owen D. Thomas Director, Chief Executive Officer and Principal Executive Officer | | | | | | | | By: | | Alan J. Patricof
Director/s/ DOUGLAS T. LINDE
| | | | | Douglas T. Linde Director and President | | | By: | | | | | By: | | /s/ MARTIN TURCHIN KELLY A. AYOTTE | | | | | Kelly A. Ayotte Director | | | | | | | | By: | | Martin Turchin
Director/s/ BRUCE W. DUNCAN
| | | | | Bruce W. Duncan Director | | | By: | | | | | By: | | /s/ KAREN E. DAVID A. TWARDOCK YKSTRA | | | | | Karen E. Dykstra Director | | | | | | | | By: | | /s/ CAROL B. EINIGER | | | | | Carol B. Einiger Director | | | | | | | | By: | | /s/ DIANE J. HOSKINS | | | | | Diane J. Hoskins Director | | | | | | | | By: | | /s/ JOEL I. KLEIN | | | | | Joel I. Klein Chairman of the Board |
| | | | | | | | | | | | | | | | | | | | | | By: | | /s/ MATTHEW J. LUSTIG | | | | | Matthew J. Lustig Director | | | | | | | | By: | | /s/ DAVID A. TWARDOCK | | | | | David A. Twardock Director | | | | | | | | By: | | Director/s/ WILLIAM H. WALTON, III
| | | | | William H. Walton, III Director | | | By: | | | | | By: | | /s/ MICHAEL E. LABELLE | | | | | Michael E. LaBelle Executive Vice President, Chief Financial Officer and
Principal Financial Officer
| | | | | | | | By: | | /s/ MICHAEL R. WALSH | | | | | | | | By: | | /s/ MICHAEL R. WALSH
| | | | | Michael R. Walsh Senior Vice President, Chief Accounting Officer and
Principal Accounting Officer
|
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Boston Properties Limited Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. | | | | | | | | | | | BOSTON PROPERTIES LIMITED PARTNERSHIP | | | By: Boston Properties, Inc., its General Partner | February 28, 201826, 2021 | | /s/ MICHAEL E. LABELLE | | | Michael E. LaBelle | | | Chief Financial Officer (duly authorized officer and principal financial officer)
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Boston Properties, Inc., as general partner of Boston Properties Limited Partnership, and in the capacities and on the dates indicated. | | | | | | | | | | | | | | | | | | | | February 26, 2021 | | | | | February 28, 2018 | | | | | | | | By: | | By: | | /s/ OWEN D. THOMAS | | | | | Owen D. Thomas Director, Chief Executive Officer and Principal Executive Officer
| | | | | | By: | | /s/ DOUGLAS T. LINDE | | | | | | By: | | /s/ DOUGLAS T. LINDE
| | | | | Douglas T. Linde Director and President
| | | | | | By: | | /s/ BRUCE W. DUNCAN
| | | | | Bruce W. Duncan
Director
| | | | | | | | By: | | /s/ KAREN E. DYKSTRA
| | | | | Karen E. Dykstra
Director
| | | | | | | | By: | | /s/ CAROL B. EINIGER
| | | | | Carol B. Einiger
Director
| | | | | | By: | | /s/ DR. JACOB A. FRENKEL
| | | | | Dr. Jacob A. Frenkel
Director
| | | | | | | | By: | | /s/ JOEL I. KLEIN
| | | | | Joel I. Klein
Director
| | | | | | By: | | /s/ MATTHEW J. LUSTIG
| | | | | Matthew J. Lustig
Director
| | | |
| | | | | | | | By: | | | | | By: | | /s/ KELLY A. ALAN J. PATRICOF YOTTE | | | | | Kelly A. Ayotte Director | | | | | | By: | | Alan J. Patricof
Director/s/ BRUCE W. DUNCAN
| | | | | Bruce W. Duncan Director | | | By: | | | | | By: | | /s/ MARTIN TURCHIN KAREN E. DYKSTRA | | | | | Karen E. Dykstra Director | | | | | | | | By: | | Martin Turchin
Director/s/ CAROL B. EINIGER
| | | | | Carol B. Einiger Director | | | By: | | | By: | | /s/ DAVID A. TWARDOCK IANE J. HOSKINS | | | | | Diane J. Hoskins Director | | | | | | | | By: | | /s/ JOEL I. KLEIN | | | | | Joel I. Klein Chairman of the Board | | | |
| | | | | | | | | | | | | | | | | By: | | /s/ MATTHEW J. LUSTIG | | | | | Matthew J. Lustig Director | | | | | | | By: | | /s/ DAVID A. TWARDOCK | | | | | David A. Twardock Director | | | | | | | | By: | | Director/s/ WILLIAM H. WALTON, III
| | | | | William H. Walton, III Director | | | By: | | | | | By: | | /s/ MICHAEL E. LABELLE | | | | | Michael E. LaBelle Executive Vice President, Chief Financial Officer and
Principal Financial Officer
| | | | | | | | By: | | /s/ MICHAEL R. WALSH | | | | | | | | By: | | /s/ MICHAEL R. WALSH
| | | | | Michael R. Walsh Senior Vice President, Chief Accounting Officer and
Principal Accounting Officer
|
|